They are both great cards for that resolution with the slight edge in image quality going to the ATI card. Really it's whichever you can find the cheapest.
Wow... an "HD 4870 vs GTX 260" thread. Haven't seen many of those on this forum.
Anyhoo... I am a 1680 x 1050 gamer and I have used both cards extensively and I would give the edge to the GTX 260. More vram and better OC potential...significantly faster in Crysis and Warhead, also. Try to get a Core 216 GTX...great cards for the money. But I would even give the edge to just a vanilla GTX 260 196 SP. I had one of those also.
I.Q. is about the same. Maybe ATi is slightly better...it's in the eye of the beholder I think.