I think I would upgrade projector first, however you could easily do both with your budget of 3500.00. I would look for a gently used JVC DILA projector(rs400, rs500) and you could easily get one of those and a screen under your budget. As far as the screen goes, if you are happy with the size...
Should be a lot of good deals on used ivc projectors now and in the near future. I preordered the new JVC NX9(patiently waiting)and will be selling my JVC RS500 once it arrives