The only thing I would suggest for upgradeability is to get a motherboard that supports the quad processors, not just the extreme.
Edit: I must have been looking at your selections when Krusty posted. FYI I just built a core 2 system from newegg for about $600.
What I would buy with $1200...
GIGABYTE GA-965P-DS3 ATX Intel Motherboard - $129
G.SKILL 2GB (2 x 1GB) 240-Pin DDR2 SDRAM DDR2 800 (PC2 6400) Dual Channel Kit Memory - $89 x2
Intel Core 2 Duo E6700 Conroe 2.66GHz LGA 775 Processor - $320
Total $627
No need for OS, just use the one you're retiring unless it's not XP.
And then I'd fill in with goodies.