Different chips... the 3.46Ghz dual core is Pentium 4 based, while the 1.83Ghz dual core is Pentium M based. The former is faster, but not as fast as the raw clockrates would suggest since the latter does more work per cycle.
No, you can't upgrade to the 3.46Ghz Pentium D. It uses about 4 times the amount of power your CPU does (130W vs 31W) and thus produces 4 times the heat. Also they don't use the same connection.
You can upgrade to a 2.16Ghz Core Duo, but that chip is about $640. Just as a side note the 3.46Ghz Pentium D is $999.