My thoughts:
CPU- Intel Core 2 Duo E8400 Wolfdale 3.0GHz 6MB L2 Cache LGA 775 65W Dual-Core Processor ($239.99)
MOBO:GIGABYTE GA-X38-DS4 LGA 775 Intel X38 ATX Intel Motherboard ($199.99)
RAM:Crucial Ballistix Tracer 2GB (2 x 1GB) 240-Pin DDR2 SDRAM DDR2 800 (PC2 6400) Dual Channel Kit Desktop Memory ($72)
GFX:DIAMOND Viper 3870PE4512SB Radeon HD 3870 512MB 256-bit GDDR4 PCI Express 2.0 x16 HDCP Ready CrossFire Supported Video Card - Retail ($200)
HDD:Seagate Barracuda ES.2 ST3500320NS 500GB 7200 RPM 32MB Cache SATA 3.0Gb/s Hard Drive - OEM ($144.99)
PSU:COOLER MASTER Real Power Pro RS-650-ACAA-A1 ATX Form Factor 12V V2.3 / SSI Standard EPS 12V V2.91 650W Power Supply ($140)
CASE:NZXT Apollo SILVER NP Silver SECC Steel Chassis ATX Mid Tower Computer Case ($70)
TOTAL: $1109 ... you could probably lower some stuff....
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