That looks about like the setup I'm trying to fly past my wife. Basically a sub-$300 PC, or $400 with a good vid card - that's with a case/PSU combo to get under $300. Possibly a good Media Center PC when I can upgrade again.
*nods* Very good inexpensive setup. Tom's had a $500 game rig earlier this year, and the prices have really plummeted since then - and getting ready to do so again.
I also agree with waiting at least 6 months after the new stuff comes out before getting it (what am I talking about? I've had the same system for about 8 years!). Prices will drop. Also, it looks like there will be a "mainstream" Nehalem released with the others, just maybe not at the time - but maybe a month or two later. Go back and look at the chart that was put up earlier in this thread.
When you do get to it, build a great system, and it should last you a few years (up to 5). And for game play, all you should have to do is upgrade the graphics and nothing else. My A7V333 and XP 2000+ can attest to that.