Yeah, that sounds pretty likely.
I reckon if you get it to a good bike shop and get them to give it a full service, it would make a huge difference, and save you the money of buying a new groupset.
Of course, Ultegra is a pretty good deal at the moment
If you decide to go the new route, take a look at the Scoot Speedster range, I have a 2007 S30 with 105, and couldn't be happier. They should be right around your price range, too. I'd avoid BD CF, just because I've only really heard bad things.