MySql recommended hardware
You should invest in both.

As for MySQL, if you are using InnoDB as your default storage engine, you must upgrade to MySQL 5.5 in order to use more cores. Here are some of my past posts on this subject


Multi cores and MySQL Performance
Possible to make MySQL use more than one core?
About single threaded versus multithreaded databases performance
16 Cores 12 GB RAM server MySql Configuration - my.cnf


As a point of reference, I have a client at my employer's web hosting company that has three DB Servers in Circular Replication. Each DB server has the following:


MySQL 5.5.9
192 GB RAM
162 GB InnoDB Buffer Pool
dual hexacore (that's right, 12 CPUs)
1.8TB Disk Volume
978 multitenant databases
892 GB of InnoDB Data
innodb_file_per_table enabled


They have had this setup for a whole year. I personally configured my.cnf for multicore engagement. All 12 CPUs are in use. The InnoDB Buffer Pool is full to capacity. There have been no complaints from the client on the DB Performance since this layout was setup for them.

Tuning InnoDB is very important because if you don't, MySQL 5.5 will perform worse than MySQL 5.1. In some cases, it can be worse than MySQL 4.1.


Query runs a long time in some newer MySQL versions
Why mysql 5.5 slower than 5.1 (linux,using mysqlslap)


As for RAM, tuning connection usage, the number of connections and InnoDB caches is the most important thing


Cache MySQL database in memory
What are the main differences between InnoDB and MyISAM?
How do I properly perform a MySQL bake-off?