Power to Weight

It really Depends on what you are doing with your car. Drag racing is very different than roadracing or circle track.

Quick over-view of the different types of weight and how they affect performance.

Sprung (regular) weight- This weight is most of the weight in an average car. This weight determines the center of gravity height, the loading of the tires, most of the percentage of the power to weight ratio, and most of the weight you are trying to accelerate.

Un-sprung weight- This is the weight that controls how fast your suspension reacts, the ride quality, and the capability of your shock control and such.

Rotating mass- This is anything that actually spins. Engine components, flywheel, transmission gears, drive shaft, rear gears, brakes, wheels tires etc. This weight actually does double duty. It uses engine power to spin and acts as part of the weight that is being moved around.

Now as you can see by the above descriptions it is much more important to reduce rotating mass than any other weight. Especially from a pure acceleration standpoint. The components that spin at engine speed are most important, then transmission speed and so on. But you also have to consider how far out the wight is spinning. The wheels and tires, as others have mentioned have a lot of effect on the braking is huge.

Un-sprung weight is much more important to those corner people(like me) than to straight line only racers. fast suspension reaction is really important in a situation like a mid-corner bump leading onto a straight where you can't really afford to loose grip or cornering speed. Also a Big factor in ride quality for those concerned about that.

Sprung weight is everything else. The weight that limits the maximum cornering, the maximum acceleration and braking, and the stress put on all your components.

After all that, The only thing I can say is that every case is different, and most likely, you will find that a mix of engine mods and weight loss is the best thing in your case(again, like others have mentioned).

Hopefully That somewhat long winded reply makes things a little bit clearer.