Getting the 4690k and gtx 970 would definitely be a lot better, there's a huge difference between the gpus but only very minor gain going for the more expensive cpu (especially if you overclock the i5 to atleast the same frequency as the i7). For gaming getting a better gpu over a better cpu is always the better option.
The i3 would only bottleneck a 970 in a few games. 99% of the time, it would be just fine.
However, even with the 960 there is a slight bottleneck that isnt noticeable, however this means that you get the same performance from an i3 plus 960 as you would from an i3 plus 970, so its not worth the extra $$$ unless you are planning to upgrade to an i5.