This will be a gaming rig. My favorite types of games are FPS and MMO. I'd prefer to keep the price below 200 dollars. My monitor is 25", but I might upgrade to a larger size in the near future. I am content with medium settings.
Don't pay more than $165 for the GTX 260 as the significantly faster ATI HD 4890 can be hard for around $190 to $200. Also note that the ATi HD4870 1GB, whose performance is very similar to the GTX 260, can be had for $150.
If you are not against the used maket, you can get a 280 for your price range. I saw one on sale for $150 at the xtremessystem forums but I think it is gone now.
Keep an eye for special at Fry's. I got my BFG GTX260+ OC for $130 AR less than a month ago. I don't think the special was listed in their ads. I just happen to to shopping that day at Fry's when I spotted the deal.