I recently made a beastly computer.  It had a Nvidia 285, a 2.66 i7 which I overclocked to 3.7 easily, a deluxe ASUS board, 6 GBs for 1600 RAM a 1.5 TB drive and it was great.  It ran Crysis on the highest settings no problem and all was right in the world...

   Well except that it cost 1800 dollars.

   I decided to sell it back to frys piece by piece and start from scratch.  Glad I did since I managed to basically match the performance of the 1800 dollar i7 computer and for under 1000 dollars.  A big key is Amazon with its tax free buys, that saved me over 150 bucks alone vs buying stuff at FRYs

   First I found the i7 2.66 processor at Amazon http://www.amazon.com/gp/product/B001H5T7LK only 267 bucks a 100 dollar savings over buying it retail at frys (and paying 8% california tax)

    Next the GPU, I did step down to the GTX 260 instead of the 285 (about a 15% drop in performance) but instead of 379 for the 285 I paid only 149.  Yes thats right, high end graphics card, 149 at frys with in store pickup.  http://shop4.frys.com/product/5636781;jsessionid=cNrEZaofs7fgb7+Kn+CPTQ**.node3?site=sr:SEARCH:MAIN_RSLT_PG

   After that RAM, I found 6GBs of very nice Corsair RAM complete with heat sinks for only 100 bucks http://www.amazon.com/gp/product/B001J3U4LC

   Next the DVD RW drive, I found a Samsung drive for only 29 dollars! http://www.amazon.com/gp/product/B001G5Z1JS can't beat that.

   Then the high quality OCZ 700 Watt power supply (you could go smaller if you wanted to drop the graphics card down or bigger if you REALLY wanted to future proof the setup) for only 74.99 http://www.amazon.com/gp/product/B000HJ9CEO

   The next step I have two options, the first one is what you would pick to really make the price great, and the 2nd is the one I picked for myself (one of my 2 splurge components) since I plan on using SLI at some point in the future.  I went with the high end EVGA board http://www.amazon.com/gp/product/B001KX8VES for 289 (ouch) but found http://www.newegg.com/Product/Product.aspx?Item=N82E16813130221 a very capable MSI board for only 169.99

   Next is a decently sized Hard Drive.  You can go big with the 129.99 Seagate 1.5 TB drive or cheap with the 500GB Seagate for only 62.99.  Since this is a value thread I'm going to list the cheap one http://www.amazon.com/Western-Digital-500GB-Cache-WD5000AAKS/dp/B000RT5AE0/ref=pd_bbs_3?ie=UTF8&s=electronics&qid=1236594957&sr=8-3 

   So you should be at about 800 bucks now without a case/any extra fans you might want for overclocking which gives you a LOT of head room to get whatever you want and stay under 1k as promised.  

I personally went with the case from my last build http://www.amazon.com/Cooler-Master-Cosmos-Tower-Silver/dp/B000ULLN1Y/ref=sr_1_4?ie=UTF8&s=pc&qid=1236595079&sr=1-4  The cooler Master Cosmos case is beyond awesome.  Its huge inside, solidly built, expandable almost to a fault (12 bays!) and very well designed inside and out.

 You can instead go with a very competent lower cost case like the antec 300 for only 63 bucks http://www.amazon.com/Antec-Hundred-Gaming-External-Internal/dp/B000GQMHBI/ref=sr_1_3?ie=UTF8&s=pc&qid=1236595162&sr=1-3 which keeps you under 900 dollars for your total.

   So for about the cost of a PS3 plus a 360 Elite you can get yourself a gaming rig for at least the next 3 years that blows both out of the water and then some.  The Amazon components can be shipped free and without any tax to boot so the cost of the components is the cost of the final product (add in a few bucks for the frys/newegg components which will have tax).

   If you go with the very capable MSI board and the Antec 300 (which I didn't, my final cost was more like 1050, but hey, thats still 900 less then I paid last time) you can easily stay under the 900 dollar mark, and if you drop the RAM to 3 1GB DIMMs or cut a few other corners here and there (a 40 dollar case for instance) 800 dollars isn't out of the question as a total for a very functional i7 system.

Sorry, but using the components you linked to (and I mean the cheaper alternatives), the base price including an operating system and without any shipping charges is $1085 (including an aftermarket heatsink for overclocking the i7).

If I use your suggestions for a $40 case and only get 3GB of DDR3 for $60, I still only save $60, which brings it down to about $1000... no where near your 800-900. I'm guessing you were adding this up in your head and didn't carry correctly, and you simply forgot the addition of an operating system.

Blows away the PS3 and 360 huh? I have yet to see anything on PC that blows away anything on PS3 or 360. What's that you say? Crysis? Sorry but I'm not impressed.
And before anyone pulls out a bullshot here's Crysis in motion:

Your Uncharted video did not load. Even if it did, I'd still say Crysis looks better. There are a lot of games that look better than Uncharted 1, including many other 360 and PS3 games.

You, sir, just won the daily EPIC FACEPALM WORTHY FAIL Award. Please come back tomorrow and provide us with more lulz.

To bad you can buy an E8600 dual-core for the same price, saving $50 on the RAM by not having to use 6GB DDR3 but using 4GB DDR2, and saving over $100 on the motherboard by using P45 rather than X58, keep everything else the same, and guess what? It owns your system in gaming benchmarks while being $100-200 cheaper depending on motherboard.

Internets winnar! You bring the lulz, sir.

   I don't know how you're adding.  Ill break it down briefly

    Motherboard 169.99 (plus whatever tax your state charges with Newegg)

     GPU 149.99

    Processor 267

     Hard Drive 62.99

    Power Supply 75 (and its overkill, the minimum for the 260 is 500 if you're not going to SLI it ever, so you can get a 30 dollar supply just fine)

   DVD RW 29.99

    RAM 109.00

    Case 63.00

    So 170+150+63+75+30+109+63=927.  

Drop the power supply down to 500 Watts and 75 becomes 30, drop the RAM down to 3GBs and 109 becomes 40 and drop the case another 20 bucks and it becomes 40.  That's another 135 saved, makes the total around 800 even.

   Yes you might need an additional specialty fan to seriously overclock, but the i7 is stable enough you can get to 3.5Ghz or so from 2.66 with just air cooling assuming good case air flow.  

   I repeat though, the cheaper build is just over 900, if you drop the power supply, case and RAM down a little it comes in at 800 dollars easy.

   As to adding in the hefty 150 dollar or so windows tax, I would bet almost everyone on this forum can get their hands on a copy of Vista or XP that will validate.  I have an OEM of Vista left over from installing it on my laptop that validates if you call for instance and a friend has a retail home premium retail with 3 licensees of which he is only using 1.  Either is an easy Vista path.  

   When building a PC it is not neccesary to include the cost of the OS.  You can use a free one (any Linux) or find a copy of Windows that doesn't cost an arm and a leg.

   Best way to avoid the windows task in a 100% legit way?  Download the Windows 7 beta and you'll have Vista SP2 for free for another 6 months just fine (thats what I did this time around).

   Software costs are not like hardware costs, you don't have to pay them to have a working machine (unlike, say, trying to run the box without a processor, video card or other important component) so I see no reason to include them.

   It does win in pre i7 games that were in no way optimized for i7, I would bet you newer i7 optimized games like empire total war will give results more in line with the non game based tests (the ones at the start where all i7s dominated).   Also you are forgetting the i7 is a much more efficient and VERY easily OCable chip.  You can, with no special hard ware, get the i7 running at 3.5 Ghz with no problems at all.  When doing high end air cooling several OC sites were pulling 4.0 Ghz numbers off the 2.66 i7 chip which is pretty nuts.  

http://www.tomshardware.com/reviews/overclock-phenom-ii,2119.html

   Yes you can get old tech and it will be cheaper, that is always the case, but in future games the huge gains the i7 makes in performance and architecture will more then make it a worthwhile value.  Also if you OCed the i7 even moderately that advantage your E8600 enjoys (which is nowhere near as OCable) evaporates even now.

    Most of the benchmarks in your test were also relatively low settings and low end games.  In higher end applications where the GPU and CPU need to work together to render the increase in i7 performance matters a whole lot more.  Look how the 3.2 i7 performs even on those low end tests, the 2.66 version can get to 3.2 without breaking a sweat.

I see.  So you are recommending we use Windows OS illegaly, and use crappy cheap PSU's and Cases for high end parts?  Interesting.  Just never get a job as a computer builder/consultant.