I think Saruman would have kept the Ring and used its real and symbolic powers to contest with Sauron for control over Middle-earth by building up his own empire. Sauron would then have suspended his campaign against Minas Tirith, and instead sent his armies north-west, through Rohan towards Isengard. I don't think we've been given enough information to say whether Saruman or Sauron would have won the fight.
In the chapter "the White Rider" (LOTR Book 3, chapter 5), shortly after Ugluk's foray has been defeated, Gandalf gives a detailed analysis of Saruman's motives and Sauron's concerns. He says: "Even reckoned as a lord and captain Saruman has grown very strong... Saruman also had a mind to capture the Ring for himself... [Sauron] now has Isengard to fear as well as Minas Tirith..." The word "fear" seems important here.
After a comment from Gimli, Gandalf adds: "But Isengard cannot fight Mordor, unless Saruman first obtains the Ring. That he will never do now."
Saruman with the Ring would presumably have tried to do what Tolkien says Galadriel or Gandalf might have done, if they have succumbed to the temptation of accepting the Ring:
"they would have built up an empire with great and absolutely subservient generals and armies and engines of war, until they could challenge Sauron and destroy him by force." (Letter 246)
Galadriel and Gandalf each made a conscious decision not to embark on such a course; but Saruman would not have hesitated. Was he not already the warlord of a growing realm, a commander of orcs and men?
How might the Ring have helped Saruman in his empire-building?
Tolkien says in Letter 246 that the Ring is not only comparable to "a devastating weapon" (which Frodo doesn't know how to use) but also to "an object of terror in their religious cult, by which they had been conditioned to treat one who wielded it with servility". For these reasons, Tolkien tells us, the Nazgul (powerful though they were) would have hesitated to attack Frodo directly, after Frodo finally claimed the Ring for his own.
Thus, the power of the Ring is both direct (like the power of a weapon) and symbolic (like the power of a cult object). Both the direct and symbolic aspects could have helped Saruman expand his empire by winning adherents and frightening potential opponents.
I know Letter 246 says Sauron himself did not fear the Ring, would not have hesitated to confront a Ring-wielding Frodo, and could easily have forced Frodo to hand the Ring over. But there are important differences between Saruman's position, if he had taken the Ring in Isengard, and Frodo's position when he claimed the Ring in Mordor.
Frodo was a hobbit with one companion, in the heart of Sauron's realm. Saruman was a wizard and warlord, in a fortress controlled by himself, garrisoned by orcs and men, and separated from Mordor by regions which were not Sauron-friendly.
When Sauron thought Aragorn had the Ring, he reacted with a swift military offensive. In the hypothetic situation where Sauron thought, or knew, that Saruman had the Ring, I think he would have responded in a similar way. Forces from Mordor and Rhun would have been sent to fight their way through Rohan, leaving Minas Tirith undefeated to the south.
Would Saruman have been able to defeat Sauron? I don't think we have enough information to answer this with certainty. We don't know enough about the powers of the Ring, in the hands of an ambitious wizard — how it might have worked as a "devastating weapon" (Letter 246), how, as a symbol, it might in Saruman's hands have affected Sauron's servants and vassals. Nor do we how long would it have taken for Saruman to master the powers of the Ring.
I don't think it would have made Saruman invincible, and, after all, he still would still have had to contend for instance with Treebeard and the Ents, as well as with Sauron. On the other hand, Sauron was not invincible either. If he followed the strategy I've mentioned, his fighters would have to deal with the feisty Rohirrim, and would also run the risk of a flank attack from Gondor, before they could even get near Isengard.