Gaming system build for $1k, your input appreciated/wanted!

All looks great, however I'd get an X38 motherboard (it'll remove the small bandwidth bottleneck on your graphics cards) and I'd get these HD 4850s with better cooling + cheaper.

DFI LANPARTY DK X38-T2R LGA 775 Intel X38 ATX Intel Motherboard - Retail

http://www.newegg.com/Product/Product.aspx?Item=N82E168...

SAPPHIRE 100245L Radeon HD 4850 512MB 256-bit GDDR3 PCI Express 2.0 x16 HDCP Ready CrossFire Supported Video Card - Retail

http://www.newegg.com/Product/Product.aspx?Item=N82E168...

The savings from the graphics cards will cover for the difference of the more expensive board, and you will have a slightly faster and cooler running setup.

Save some $ here:
$93 shipped - $20 MIR = $73!!!
Corsair TX 650W ATX12V Power Supply - CMPSU-650TX

I'd also stick with your p45 mobo, I don't think the 1 x8 PCI-e slot is going to limit you. Yes it would be nice to have 2 16x PCI-e slots, but for $50 more is it worth it???

Now I'm also going to assume that your going to be using a 64bit OS, since you selected 4 gb's of DDR2??? If not than you won't be utilizing all 4 gb's of DDR2 with a 32bit OS.

The GPU that Emp linked is a good one, but you'll only be able to cash in on "1" rebate of $20, so keep that in mind.

That system looks fine. Your motherboard is good if you're going to run two 4850s. Sure two full x16 slots would be nice, but you're not really going to see a real difference unless you're running something like two 4870X2s.  

thanks for the guys!

Yes, I plan to run xp64...or should i just go for vista?

You should go with Vista 64, I read a review from madshrimps.de where they tested AA scaling on XP and Vista and on average you'd be getting better performance with Vista than XP.