schporto said:
I usually work from these recommendations:
http://arstechnica.com/guides/buyer/system-guide-200612.ars
The hot rod is around your price range, especially if you lower some components (really I don't see spending $125 on speakers). The god box is good if you ever hit that lottery and want to cash in

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-cpd
Just a few quick notes on what's changed since then...
AMD's continued to slash CPU prices, and has bumped up clock speeds, so now most Athlon 64 X2s are competitive with the Core 2 Duo in the same price range; the ~$225 model is now the 5200+, rather than the 4200+, which gets you another 400 MHz.
The price of their recommend video card -- a GeForce 7950GT -- has dropped slightly, and the 320 MB version of the GeForce 8800 GTS has been released at just under $300.
... and on what's likely to happen soon (in the next 3-6 months) in the consumer desktop space
AMD's ATi division is expected to
- launch their line of DirectX 10 video cards (Radeon 2xxx)
nVidia is expected to
- launch their midrange and low-end DirectX 10 video cards (lower-end GeForce 8xxx)
- possible release a tweaked high-end card, depending on how ATi's new cards stack up to the 8800 series
Intel is expected to
- make some small improvements to its high-end parts (move to 1333 MHz FSB, top-end model goes from 2.93 GHz to 3 GHz and uses less power)
- introduce a low-end, single core Core 2 variant (800 MHz FSB, 1 MB L2 cache) sold as the Celeron 4xx; this will replace the current Pentium 4-derived Celerons
- introduce a low-midrange, dual core Core 2 variant (800 MHz FSB, 1 MB L2 cache) sold as the Pentium E2xxx; this will replace the current Pentium 4 and Pentium D
- make some major price cuts