How you upgrade truly depends on what you are trying to do, and the kinds of limitations you are currently running into.
Image contrast and sharpness are determined by the lens, aided by your skill/knowledge of focusing technique and use of IS/shutter speed/tripod to minimize blurring due to camera shake.
If you’re shooting primarily under low-light conditions, then a sensor with good high-ISO performance, AND fast (better than f/2) lenses would be a natural upgrade path.
If you’re shooting primarily indoors, with family snapshots and the like being the predominant images you shoot, then a good flash unit, with appropriate modifiers, would give you better images.
In almost every case, a good understanding of light (direction, size, colour, balance) will dramatically improve the quality of your images.
So the real question is, what do you feel is holding you back? What kind of images are you trying to get that you’re not happy with? And what kind of improvement are you looking for?