I built my i7 machine for $1200 CAD ( tax) about 8 months ago, and things have come down in price a bit since then, so you should be able to build a good machine for $1000. You may want to wait until after the holidays to see what kind of deals are on as well.
The quad core i5 is a good processor, and will most likely suit your needs. But if you're looking at upgrading in the future you may want to consider an i7 with the 1366 chipset. This is the likely platform for future intel processors, and allows more GPU bandwidth if you're looking at dual GPU's in the future. This is a ton of processing power though, and most games are more GPU heavy, so its probably unnecessary. Up to you really.
For video cards I think the 5850 has a good price/performance ratio. I have one and have no problems running games at high/max. In the future you could buy another card and put it in sli/crossfire, but it doesnt scale 0 and is inefficient. You'd have to decide at the time.
I'd recommend the Corsair 650tx power supply. Its a good unit and leaves enough power for extra HDD and a second GPU if you want it in the future.
Essay Pro