Go the desktop route.
You can get a very nice machine for under $1000, including monitor.
For the video card the best bang for your buck would be the 8800GT.
I've been pro-amd for years but just recently switched to intel. Picked up a dual-core e2140(1.6ghz), 2gb N5 kingston ram($45) and an abit ip35-e($100). I overclocked the cpu from 1.6ghz-->3.2ghz stable(on air) with EASE.
For a $60 processor that's not bad at all. You could actually build the above config for a lot cheaper than $1000. If you want any links/help I'll be glad to.
BTW, my 3.2ghz e2140 is beats every stock c2d cpu out on the market=p Not bad for a $60 processor that can return $300 worth of processor back to you.