This is my first build and my only real dilemma is whether i should go with the new core i7 920 or the Intel Core 2 Duo E8500. Oh and can i get help choosing a case and power supply thanks
Go with the i7, it fits in your budget. If you were going with the core 2 setup, i wouldn't go with that particular cpu or motherboard. Instead of an e8500, you could get the e7400 and overclock, plus there is no need for and x48 motherboard... a p45 board is much cheaper and offers the same performance, and the x48 uses ddr3 which makes it even more expensive.
With i7, you will want to get triple channel memory though. With a single 4890, a decent 600W psu will suffice, you may even get away with a 500W, though i wouldn't recommend it. If you plan to crossfire in the future, i would recommend at least 700W. The key when looking for psu's is that 80plus certified, it is for me anyways. Bronze or sliver, even better.