If you have that kind of money go spent it, but as others have sayed you really need to cut back on some of the less important parts and get a good graphics card, with that kind of buget I´d get a 8800GTX hands down, all you really need for gaming is a good Processor, Ram, and a graphics card (and a good motherboard but on for 100$ should be fine), the rest is just extras.

If I had the money I´d be making one now too but there really are not that many high-end PC games coming out soon that I need to play, the next big thing for me will be Starcraft 2 which my PC will handle without a problem, still all the games (exept for Crysis) are coming to 360 so its a much cheaper solution for me,  plus I´m sick and tired of checking weather a new game will work or not or weather I need to upgrade, so I´m gonna wait till quad CPUs are cheap enough to get a PC that runns games like Crysis smothly for 500-600 $(CPU,RAM and GPU) which will take a while so I´ll stick to consoles till then.

I would say go for Intel over AMD. My e6750 is a much better performer than a 6000+ and the price difference at least in the Uk is about £15. I had to make the same decision myself. It wasn't a hard choice :) If you video encode you will certainly notice the difference. Intel > AMD for video encoding.

106.99

Asus M2A-VM-HDMI AMD Socket AM2 ATX Motherboard / Audio / Video / DVI / HDMI / PCI Express / Gigabit LAN / USB 2.0 & Firewire / Serial ATA / RAID

159.99

AMD Athlon 64 X2 4800+ 2.50GHz / 1MB Cache / 1000MHz (2000 MT/s) FSB / Socket AM2 / Dual-Core (Brisbane) / Processor with Fan

148.99

Asus EN8600GT SILENT/HTDP/256M nVidia 8600GT Chipset (540Mhz) 256MB (1.4Ghz) DDR3 Dual DVI PCI-Express Graphics Card

112.29

Corsair XMS2 TWIN2X2048-6400C4 Matched Pairs 2GB kit (2x1GB) PC6400 DDR2-800 CL 4-4-4-12 240-pin Dual Channel Memory

How's this? (cut back on cpu/mb and boost vid card)

I can also do away with the overkill keyboard/mouse. But I would really like to keep the 22'' screen :) Is that card good for 1680x1050?

edit: formatting to make it easy to read

Is the difference good enough to justify the price different, though? I am not doing video encoding for professional work. Just a hobby where I convert videos to DVD so that I can't watch it on TV in the living room (which I rarely do, anyways ).

No, it's not. They're practically the same but in your price range AMD is slightly cheaper.

8600GT is not noticeably better than 2600XT either, but 2600XT has better video decoding and is $20+ cheaper.

That sounds a lot better to me. And that card will handle any resolution your monitor can handle.

[edit: But you may want to consider Game_boy's advice above if you want to do that video work; I wouldn't know about that.]

Personally I wouldn´t go with a 8600G, just because they are new doesn´t make them top of the line, they are hardly any better than my 7800GS but cost more, if you don´t want to replace it within the next year you´ll really need a 8800 the difference in performance is huge. the rest sound very good IMO.

Here is a site (it german but you don´t need to read anything) that will show you what GPUs are out and how they compare. http://www.3dchip.de/Grafikchipliste/Leistung_Graka.htm

the 8600GT is worse than the better 7XXX searies, rigth now a 8800Ultra is the best but for the price its not much better than a GTX so thats really the best right now, or you could go with a 7900GTX or a X1900XTX if you don´t whant to spent so much, I here the X2900XT (Radeon DX10 card) isn´t that good yet so you might want to wait if you like ATI, if you want to have a year without worries I´d deffinitly go 8800GTX or GTS.

 For such a small difference in price I would say it's completely worth it. I don't do much video encoding myself but faster is always better.

Galaki where are you from? If you are from the US. You need to show New Egg as Game Boy suggested. You would be able to build a lot better system for your money.

According to this: http://www.anandtech.com/cpuchipsets/intel/showdoc.aspx?i=3038&p=7

E6550 is 0% faster than 5600+ at Windows Media Encoder.

But

5600+ is $150 (http://www.newegg.com/Product/Product.aspx?Item=N82E16819103771)

E6550 is $180 (http://www.newegg.com/Product/Product.aspx?Item=N82E16819115030&Tpk=e6550

So it's 20% more price for no more performance. -- About all the people going "8800!!!!!!!!", it's too expensive to justify because it has no video playback acceleration and maybe a 20% increase in framerate for double the price. Like I said, AMD offers better value in graphics cards at your price range.