I am going to take the opposite approach as jonny here. Considering the resolution you are playing at right now, your budget doesn't leave much open for a new monitor in the first place. So, you may upgrade to a 19" LCD which will be well within the performance of an 8800GS even with many of the newer games. Granted, $1000 is a good amount of money for a new system but I would rather spend $500 on the system and then spend $300 on a new monitor to take advantage of the new system.
My main issue with this is that the "$1000 later" mentality really doesn't help you now and you will be stuck with the same system for the forseeable future.
I have these 4 boards currently: Biostar Tpower I45, DFI LP Dk P45-T2RS+, Gigabyte X48-DQ6 & ASUS Maximus II Formula. In the next little bit I will be building 4 rigs (me,wife,son,brother). I bought all of these when they were on sale and saved lots but I won't know if they work "ok" till I start.
I was ok with that "risk". Are you? If not hold on to the money you prsently have (DON'T SPEND IT !!!) and when you get close to the amount you need start buying. First though you need to choose your hardware.
That case looks ok but Antec 300 or Coolermaster 590 would be much better choices. Or even an Antec Sonata III that comes with a good power supply would be a good choice. Direct Canada usually has the better prices.
I totally agree with Sky thats is probably the best way to go a decent budget rig and the perfect starter rig to a performance pc later on down the road. I'd keep an eye on the BST thread and in a few months purchase a used video card I don't see that 8800GS lasting very long, but the important thing here is budget and staying within in it.