64-bit OS is not hindering anything, the only real difference you should notice is the ability to have 4GB+ of RAM, and 64-bit drivers instead of 32-bit drivers (and in some cases, non-existant drivers). If you haven't checked for video driver updates, however, now would be the time.

Performance is not the same thing as showing lower CPU usage % in task manager -- the metric you want to be looking at is the in-game FPS (frames per second) indicator. You want it to be high (no less than 20-30), but most importantly you want it to be smooth. It's okay to give up some framerate in order to gain smoothness -- proper FPS limiting is going to give each game session more opportunity to render at the same speed. By overclocking your CPU and video card, your FPS should increase, but you want to spread that increase evenly -- if not, each session will essentially be fighting for what the active window is busy hogging. Note that without FPS limiting, CPU usage % in task manager is always going to be as close to 100% as possible, especially running 5 characters on 2 cores. You can also try changing CPU affinity if you haven't -- by default I believe WoW is using the first two available cores, so all 5 of your instances are probably trying to run on both cores. You could set 2 on 1 core and 3 on the other, and this will also result in smoother play to some degree.

If your video card is a limiting factor, then reducing game resolution as well as setting the video options to lowest detail/highest performance is going to help a lot.

If you want to look at a hardware purchase, increasing the number of cores is the first thing you would want to do. A quad core is going to perform significantly better with 5 than a dual core.