It is an i7, yes. Since that's the fastest one Dell shipped, it's the fastest one that's guaranteed to work.
If you choose to try a faster CPU, remember:
You can use ONLY second generation Core i CPUs - third (and the soon to be out fourth) generation CPUs will not work.
Don't install a CPU with a greater TPD rating (45W)
this CPU is still available
Also be sure you realize that the CPU is only part of the performance equation - for overall work, if you still have a conventional hard drive, the $200 is better spent on a solid state drive. And if it's the video performance that's lagging, that cannot be upgraded.