Build it yourself. you can take 2-3 steps back from the bleeding edge tech and have a lovely stable machine that is plenty (even exceedingly) fast for another few years.
It's finding the middle ground between New components that are expensive because they're new, and old stuff thats expensive because no one makes or uses it anymore.
Toms hardware has a link to building a 800$ gaming rig. Few of my friends just recently built themselves new computers. Around 1300$ each. They're very good gaming machines, and in a micro atx form factor, so that they can be strapped to the back of their motorcycles. What can I say? we're nerd bikers.
a few tips for you
1. don't skimp on RAM. do the background research on what works best/fastest/stable etc, then buy plenty. I'd say at least 2 gigs these days. at the very minimum.
2. Hard drives. I like a 3 hard drive setup. 1 smaller very fast drive for my OS/swap 2, one medium/large fast for application installations. 3 big honkin
bosshoss drive for storage. Whatever you go with, this can be your bottleneck.though they have done tests with magnetic media, and found a limit of around a terabyte of throughput, nothing you get hard drive wise, will in any way shape form or in the next 10 years approach that limit. Again research.
3. Read the product reviews. Nerdland will often times take one gadjet, marginally overclock/farkle it up, and charge out the butt for it. A new nvidia 8800 series video card for 900$ with built in water cooling.
4. Case and formfactor, There are lots and lots of options here. Big arsed server box if you don't plan to be moving your computer around. Little micro atx aluminum cases with built in carbon fiber handles and a 7.5 inch slot for a pop out monitor. Personally i have a Lian Li pc65.
5. motherboards/power. There are lots of perfectly good motherboards that don't get bought....because they don't have the shiny stuff. Consequently, they don't cost nearly as much as the other guys. You probably won't need a board with 4 built in gigabit ethernet ports. Power supplies are the same way. I tend to overbuy on my power supplies, just because I need a buttload of molex connectors, and i like power supplies with big fans that move Lots of air.
There are equipment reviews all over the net, as well as step by step stuff. Tomshardware again comes to mind.
And I do most of my shopping at newegg.com though pricewatch.com also has good deals.
What these other guys are saying sounds right to me though. If you aren't doing the gaming thing, it may be more cost effective to just do some upgrades, instead of a complete rebuild. But thats no fun
Good luck.
*edit* Oh yeah, on the off chance that you're decided to go to linuxville, you might wanna take a look at what a humongous pain in the "O Ring" ATI cards can be with linux boxes. Just sayin.
