i5-4690 without OC or Intel Xeon E-3 1231 V3 for Gaming??

Solution
I disagree.

Recent games such as GTA V and The Witcher 3 are optimised for multiple threads, and as games become more demanding on hardware, this trend is only going to increase. If you can afford the Xeon, then go for it.


As games do not typically take advantage of hyperthreading, the difference would be imperceptible outside of synthetic benchmarks and where it does exist, the i5 should lead (again though, we are talking like 1 or 2 percent maybe).
 


As i already pointed out. The no.of Hyper Threads (8) would be beneficial for him.
 


Looking at benchmarks for the Witcher 3 here: http://wccftech.com/witcher-3-cpu-benchmarks-fx-63008350-i7-4790ki5-4690ki3-4130g3258-oc/

We see that the i7-4790k pulled an average FPS of 84.4 versus an average FPS of 79.2 for the 4690k. That's a difference of 6% which is hardly anything to write home about, and I will stand by my assessment that it is imperceptible. Once you consider the fact that the i7 is running at 4.0GHz and the 4690k is only running at 3.5GHz, it is pretty clear that regardless of what the developer may have said, hyperthreading is not actually doing anything useful in this game and thus will not benefit the Xeon in any way in this game.
I can't look up benchmarks for every single game ever made but I believe if the OP were to pick a few of the games he is interested in and look up benchmarks for them, he would see that hyperthreading makes no difference and that any difference between intel CPUs for gaming comes down largely to clock speed (assuming a 4 core CPU).
 
The difference may be nothing to write home about, but it's there nonetheless. If the OP can afford the Xeon, then why shouldn't they take it now? If the comparison was between a 4690K and a Xeon, then I may have a different view, but it's not.

Watch TotalBiscuit's port report of GTA V and you'll see that the CPU load is evenly spread across all the threads. Whilst this doesn't necessarily translate into a higher frame rate, it does set a precedent that future AAA games are likely to follow. Like I said, if the OP can afford the Xeon and accommodate this precedent now, then it makes perfect sense to do so. Otherwise, the OP may find themselves upgrading again within a few years.
 

Actually, Hyper-Thread do have advantages.
It depend on how many threads the game is tuned for, and how well the OS can manage those threads. If the game or the os dispatches critical tasks on the slower thread, game performance will suffer.So, both thread & core should have equal priority.
It will also help in heavy editing, rendering, streaming, video encoding, not really useful for gaming but as i said it depends.
 
Something else to keep in mind when comparing the 4690k/4790k, 500mhz speed difference between the two. Unless both are set to run the same speed you're not comparing ht vs non ht.

http://www.anandtech.com/show/8227/devils-canyon-review-intel-core-i7-4790k-and-i5-4690k/5

Very little difference. How future games will handle threading or require it, no one knows. People can speculate but benchmarks are the only accurate measurement with hardware and software in hand. Beyond that it's guesswork and fortune telling.
 


More and more games are taking advantage of more than 4 threads.

I would recommend the Xeon over the i5 if the budget is there.