GFX card for your PC - games are cheaper, don't need to faff with discs (GTA4 is on steam), no charges for online, many more mods for games - a mate of mine has swapped all of the GTA4 cars for VAG-group models (though why you would want a world filled with Golfs, A5's and Sciroccos is beyond me...)
However, it is widely recognised that GTA4 is the worst port in the history of the byte. Having been a huge GTA fan for years and having the PS3 and PC versions of '4, I say your not missing much and go back to San Andreas anyway, which is far better. The PC version is the same as the consoles, no missing bits - just the same crap story, limited scenery (beautiful cityscape - but it's alllllll cityscape) and very slow gfx. But for every other game, the PC is usually cheaper and arguably better (higher res, more mods etc).
It pretty much boils down to wether you prefer console gaming or Pc gaming... Then you will have your answer. Food for thought - an XBox is more portable and a pc is more likely to provide a better gaming experience(graphically + you have a mouse for easier aiming), a pc will probably also last you longer at this point in time as an xbox's remaining life span is highly debateable. Xbox's are also known to have a high fault rate and accessories and games cost a whack load more than for pc. Personally i prefer a PC but an Xbox is great when friends come over (without their computers ofcourse - if they even have (mine dont! )) so its much of a muchness!
I agree, its very much up to you which type of gaming you prefer. I have played alot of both and i prefer gaming on my XBOX rather than my PC most of the time. Granted that when it is playing up (which happens alot more than on my pc) then it can be rather frustarting but i generally find gaming on the xBox more fun for some reason. And as somwone mentioned if your mates are round then getting gaming together is alot easier.
But PC gaming has alot of pros too, probably more than the xbox infact. So pc gaming is most definatly technically better. But its all a matter of opinion.
Before you go and buy a GPU i would review you choice of board it may not be your best option. Just not heard the best things about the 5850's - best to go get some more confirmation on that though. But it might help you make ur desicion if the price changes.