gussrtk :
Yes I totally agree with your point on single core performance in gaming, but that doesn't actually answer my question. Do you think i5-7500 > ryzen 1600? especially in 3 years+ time? currently both CPUs have a trade off in FPS, and both can be built on similar budget. why would you lead someone to think that the 7500 is a great choice? Single core perfomance goes far, but ability to overclock the ryzen 1600 takes it further. Pair it with a decent <80$ motherboard and you can get 3.8Ghz (with stock cooler). as games come out with higher core utilization, the 7500 doesn't look like such a great chip.
and the link that you showed before, the benchmark comparison (which really is BS, no one looks at benchmarks, it's about real world use.). yeah, the 8400 is about 5-8% better at single core tasks, BUT, multicore tasks are at 38%? higher on the 8400. Most games today, use more than 1 core, generally 4 across the board, with some 6core games, which carry popular titles. That 38% multicore gain on 8400 is not worth the 50$? that you said OP would save?
really, just set the person on the right path, without wasting their money. I know you know your <mod edit language>, I see it in your profile. Yep, there is no reason to exclude the 7th gen, but there is also no reason not to show OP the benefits of current gen CPUs. Lets face it, if it is about single core speed, and 4 cores is all that matters.. then we might as well offer OP an i3-8350k, which has 4 cores at 4.0Ghz and will end up at about ssame price range as i7500 build. As Russle Peters said... "DO THE RIGHT THING" haha
To answer your question;
Is i5-7500 a good overall choice? Yes, since it's a good performing CPU, despite not being the latest tech.
Is i5-7500 the best overall choice? No, since there are better CPUs with same amount of money available.
How about future proofing between i5-7500 and R5 1600?
For web browsing and gaming, i5-7500 is better. For production work, R5 1600 is better. That also includes when upgrading CPU: i7-7700(K) for Intel and Ryzen 7 for AMD.
While the Ryzen CPUs do have OC ability compared to the non-K Intel CPUs, majority of users don't OC their CPUs. CPU OC is more for an enthusiast thing than common practice. Still, there are gains with CPU OC to increase minimum FPS and reduce stutter but that doesn't apply to all games. Some games (e.g CPU bound) do benefit for CPU OC but other games (e.g GPU bound) doesn't benefit almost at all from CPU OC. And of course, there are also downsides. Running CPU clock on constant high clocks (e.g 3.8 Ghz) will wear out CPU much faster than running it with stock clocks (e.g 3.2 Ghz). Not to mention the additional heat produced by the CPU which in turn increases the noise CPU cooler makes to cool it down.
About benchmarks.
Without looking for performance comparison, how would you know if one CPU would better than the other? Read the core/thread count and base/boost clocks?
There are some sites which show synthetic benchmarks which don't show the real-world performance (e.g PassMark) while other sites (like UserBenchmark) compare the real world performance submitted by the users themselves.
Also, i included the CPU comparison to show for the OP that one gen older CPU isn't a poor choice as you claim it to be. If you don't want to compare CPU performance then it's fine by me but that doesn't mean other people don't want to compare CPU performances.
It seems that you have mixed up the quad-core and multi-core performance. Here's a little description how CPU core performances are classified:
single-core performance = performance of 1 core; e.g web browsing, office apps.
quad-core performance = performance of 4 cores; e.g gaming.
multi-core performance = performance of 6 and more cores; e.g virtual machines, audio/video rendering.
i5-8400 is basically i5-7500 with 2 extra cores. That's why i5-8400 has that much better multi-core performance over i5-7500, while the single-core and quad-core performance is about the same between the two CPUs. Those 2 extra cores on i5-8400 help greatly with production use, while for gaming, i5-8400 has slightly higher average FPS over i5-7500. Depending on a game, the gain is 5-20 FPS.
But when it comes to the price to performance ratio, then the i3-8350K is currently the best value CPU there is. As far as going with either i3-8450K, i5-8400 or R5 1600 goes, that depends on the user and main usage of the PC.
Gamers Nexus made a nice review of i3-8350K that should help to decide which CPU out of those three to go for,
youtube:
https://www.youtube.com/watch?v=U_OQlw5G_5Y
With the limited info OP gave to us, we don't know if he's considering to buy those parts as brand new or is he looking towards used/prebuilt system that someone else sells.
If it's the first option then going with Intel's 8th gen CPU would give more performance for the money. But if it's the latter then going with the i5-7500 setup would be better, especially when he gets it with a cheap price.
@ OP
Here are Game Debate results with your presented setup and yes, it can run both games just fine as i stated earlier;
Overwatch:
http://www.game-debate.com/games/index.php?g_id=20810&game=Overwatch&p_make=Intel&p_deriv=Core+i5-7500+3.4GHz&gc_make=Nvidia&gc_deriv=GeForce+GTX+1060+Asus+Dual+OC+6GB&ram=16&checkSubmit=#systemrequirements
PUBG: http://www.game-debate.com/games/index.php?g_id=33898&game=PlayerUnknowns+Battlegrounds&p_make=Intel&p_deriv=Core+i5-7500+3.4GHz&gc_make=Nvidia&gc_deriv=GeForce+GTX+1060+Asus+Dual+OC+6GB&ram=16&checkSubmit=#systemrequirements