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At that framerate and resolution, you need a very powerful card. Unfortunately, Nvidia has no good cards above the GTX260; anything higher is completely outmatched by the 5850, 5870 or 5970*. And their new (DX11) cards aren't coming until late Q1 2010 at the earliest, given that the production rev hasn't taped out yet and it'll be a 3 months from then to get launchable quantities.

*As an example, when a 5850 at its RRP of $259 [when they are in stock it will return to that], it is 20-30% faster than the GTX285 at $360. A 40% premium for such a reduction in performance surely can't justify the software advantages, especially when you have the extremely low power consumption/temperature/noise of the 5850 and DX11 support.

I'm concerned the GTX260 isn't fast enough to run some of the more graphics-intensive new releases on 1680x1050 and 120Hz.

I would say most current games already benefit from three cores, and new games will increasingly use the quad-cores. If the system is purely for gaming then I would say the 720 BE tri-core; if you will be using it for any kind of CPU-intensive task that will use 4 cores then the X4 945.

Go for DDR3. It's about the same or lower than DDR2. You'll probably want a 785G motherboard for that, as going lower with DDR3 doesn't get chaeper.