Video card...since gaming is obviously a big reason for this system...do a Core2 Quad processor and get a really good video card...
Most games don't take advantage of quad prossessors which is why dual cores generally bench better in most gaming applications (10% or better). Quads tend to perform better for things like video editing and pro graphics and possibly even spreadsheets, virus scans and the like. Considering he's building a gaming system I'm not sure why you'd make that recommendation.
The exception to this is the Core I7 which, in most gaming situations, benches almost identically to the higher end Core2Duos and beats them hands down in every other area.
I did some research on the Core I5 and the second generation Core I7's today and the 2.66 Ghz Core I5 at about $200 looks promising as far as bang for the buck. I'll probably try to look up some benchmark tests on it tomorrow. If it performs as I suspect it will it will be a viable gaming alternative to the E8400/E8500 and allow for improved system upgrade options.
I also, while researching today, put together the guts of a Core I5 system (Mobo, CPU, RAM, video card) which came to about $740 with, IIRC, a GTX 260 or 265 and DDR3 1600 dual channel RAM (dreaming about replacing the guts in my 1 1/2 year old build).
Oops... guess it was a GTX 275 and the price was a little higher than I remembered. Here's the parts list (not thouroughly researched as I was just trying to get a handle on the cost of a good Core I5 system):
EVGA P55 SLI 132-LF-E655-KR LGA1156 Intel P55 ATX Intel Motherboard - Retail
Model #:132-LF-E655-KR
$199.99 $199.99
. .
EVGA 896-P3-1170-AR GeForce GTX 275 896MB 448-bit DDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Retail
$254.99 $254.99
. .
Intel Core i5-750 Lynnfield 2.66GHz LGA 1156 95W Quad-Core Processor Model BX80605I5750 - Retail
$199.99 $199.99
. .
Mushkin Enhanced Blackline 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1600 (PC3 12800) Dual Channel Kit Desktop Memory Model 996601 - Retail
$127.99 $127.99
. .
ARCTIC COOLING Freezer 7 Pro Rev.2 92mm Fluid Dynamic CPU Cooler - Retail
$36.98 -$3.00 Instant $33.98
Subtotal: $816.94