It's time to re-evaluate the processors we will want to use in a gaming system for a few reasons. First of all, I would like to discuss overclocking. Second, AMD has just released something that I feel is absolutely perfect for a budget gaming system. Let's take a look.
AMD's new surprise is the Phenom II X2 550 Black Edition. This is basically a quad-core processor with *two* cores disabled. If you thought the X3s were a steal, you'll be thrilled to know that you can have this guy for only $110. You'll also be thrilled to know that it's no slouch on performance.
Now, let's talk about overclocking. If you really want to get the most bang for your buck, you are going to have to overclock. There are no buts about it. If you choose to ignore this option, you are not utilizing one of the best features of these great 45nm processors. Ultimately, my purpose here is to show you how to get the best gaming performance for your dollar. Therefore, I am going to base my suggestions in this post on the assumption that you will be overclocking these processors.
Here is a breakdown of the processors that I suggest, and the overclock percentages they are able to obtain under reasonable conditions:
Athlon II X2 250: 25% - Stock: 3.0 GHz, OC: 3.75 GHz ($79)
Phenom II X2 550 BE: 20% - Stock: 3.1 GHz, OC: 3.7 GHz ($103)
Phenom II X3 720 BE: 35% - Stock 2.8 GHz, OC: 3.8 GHz ($119)
Phenom II x4 940 BE: 30% - Stock 3.0 GHz, OC: 3.9 GHz ($189)
Phenom II x4 955 BE: 22% - Stock 3.2 GHz, OC: 3.9 GHz ($200)
Core 2 Duo E8400: 40% - Stock 3.0 GHz, OC: 4.2 GHz ($168)
Core i7 920: 43% - Stock 2.66 GHz, OC: 3.8 GHz ($280)
Core i7-975 Extreme: 23% - Stock 3.33 GHz, OC: 4.1 GHz ($1,000)
Remember that the price of the processor alone is deceptive. The motherboard and RAM also make a huge difference in price. I might revisit this later.
Anyway, these overclocks show us a few important things. First of all, the x2 550 might just be the right chip for you if you really don't want to bother with overclocking. It already comes with a high stock clock speed (higher than any of the others) so overclocking really can't push it much farther.
Second, the Phenom II x4 955 BE only overclocks by about 22%. This puts it at exactly the same speed as the x4 940, but for a lot more money. Therefore, I can't really justify it.
Third, the E8400 stands out as a possible sweet spot here. Its gaming performance is roughly on par with the x4 940, depending on what benchmarks you look at. The price and the overclock may give it a nice edge depending on your motherboard needs.
Finally, the value of the i7 920 really stands out. At a 43% overclock, it will very clearly outperform anything else here. The price is a little more justified with this in mind.
There are also some other considerations. First, you can disable hyperthreading in the i7 920 for a small (5%) boost in gaming performance. Second, you might be able to get away with "unlocking" the disabled cores in the Phenom x2 and x3 processors. There is no guarantee that it is doable, and it depends on your motherboard and its BIOS version. I don't recommend doing this because you won't be able to overclock as much and the game performance really won't improve a lot.
The Xigmatek heatsink and fan that I'm using should work with all of these processors except the i7 920. Overclockers will love it.
Remember, the performance of these processors really doesn't make a huge difference in gaming results as long as you have a modern video card. The GPU will be your bottleneck. However, having a faster processor will help to ensure that your machine is "future proof." A faster CPU will be able to keep up years down the road when games are more demanding and video cards are more powerful. This is why the unrealistic low-res benchmarks out there still have some value.