While the 2500k is a much better processor, sometimes saving more isn't always an option. I would be rather hesitant about purchasing a Phenom2 right now though. If he is saving up cash and can't purchase right now, then seeing what bulldozer has to offer in the lower mid-range would be a very good idea.
Now that I think about it, if they can wait it out at least a month or two more, it would be very worthwhile to wait it out for Bulldozer. Even if the lower mid-range isn't much better than the P2s that are available now (which I think they probably will be a lot better...), if nothing else, then I think the prices on the i5/i7 will take at least a mild dunk to help Intel compete with the higher-up Bulldozer CPUs. Huckleberry's build might be an even better deal by then.
@huckleberry: I don't mean to seem offensive if I say that, while the build is solid, I think it is a bit out of budget for the OP (though that's entirely their choice). I would argue a couple of your choices but I agree that if the budget were closer to $900 to a grand, that would be a pretty sweet deal (nicer DVD drive, more quality RAM...)
GPU: I do like the GTX 560, but I've honestly never used any of PNY's products. I would go the extra mile and purchase an EVGA variant of the 560 for their excellent warranties and customer service. I do feel that the 6950 is a genuinely strong contender; benchmark-wise, they compare almost head to head, but it depends on what the OP wants to do with their GPU. I would say that if they wanted to attempt to unlock the second core on the 6950, go for the 6950; but if they aren't going to bother, if they want good stability with overclocking later down the line, I'd recommend a 560. Back on the subject of EVGA, their 2GB edition (if they'd need that much VRAM) is the same price as the PNY 1GB. However, the EVGA edition is also 'superclocked', so if the OP doesn't like tinkering/OCing things themselves, it's a pretty good buy IMO.
PSU: I don't think they're going to need that much horsepower for an i5 and a single 560. I also don't have a lot of experience with, nor researched much into, that model of unit. I'd be more comfortable recommending the Antec Neo Eco or APR's recommended Corsair V2 unit that was posted before, but YMMV. ;O
Case: I can't argue with Lian Li, although I have never used a mesh case and I like to think of aluminum as a "happy medium" between the weight and durability of steel and the lightness and flexibility of plastic. A lot of the superstructure of airplanes are made of aluminum, and it makes for one solid (lol) case to boot.
RAM: I like some of Patriot's memory, and this is pretty solid-looking, but if we were keeping an $800ish budget in mind then I think cutting the RAM down from 8GB to 4GB is more achievable and probably all they'll need to start with.
Mobo: A LOT of Biostar's motherboards are really nice. I think I've recommended that particularly mobo once in the past with an Intel build. Solid choice there.
Disk Drive: Honestly, I should have put this in my build but did not think to. I only chose the Optiarc because I own two and they've always worked fantastic for me. Awesome choice, though I might argue that a Lightscribe drive could be even better if they're willing to push their dollar a little harder.
HDD: Awesome choice, no argument there. ;>
OS: That's a solid idea. If they're a student, they could get it for a lot cheaper.