Actually, the AMD 9950 Quad seems to be the sweet spot for only $170 or less these days. The E8400 will beat it for gaming 2 out of 3 times, but overall, the 9950 is better for an all around CPU such as compression, etc.
The ATI 1GB 4870 also is the gaming card for those on a budget. Do not buy a 9800 - that is a 'last' generation board. The 260 and 280 are NVidia's current gen.
Some articles on the subject:
ATI 4870 1GB vs Nvidia -
http://www.anandtech.com/video/showdoc.aspx?i=3415
Some stats on the CPU's:
Here are some compression stats:
