Your coworker is definitely right. If you're looking for performance, an i5 or i7 is definitely the way to go. But as you have hinted at, it'll be WAY over your budget. This is especially true considering you also want to SLI mobo.
General knowledge is that if you willing to spend approximately $170+ on your processor, you might as well get an i5 (arguing that since the phenoms were pretty close in price to an i5, you might as well splurge a bit for it; this may not be the case anymore though, I believe they dropped some of the phenom prices a bit).
But I digress.. So, anything under that price range is AMD territory simply because intel does not have any processor of comparable quality to say an x3 720 or x4 620 at that price range (at least not yet). Thus, yes, as you guessed... AMD is the budget route. You can also get ddr2 RAM with an am3/am2+/am2 mobo, which gives you a little future proofing while being immediately cheap, which is what you are after. (I linked ddr3 RAM because newegg had it on sale, but I just clicked the link again and it seems the price is back up
use these instead if you're still going that route
http://www.newegg.com/Product/Product.aspx?Item=N82E16820227267 )
Those are going for pretty cheap at $74 after MIR.
Though personally, I <3 g.skill
http://www.newegg.com/Product/Product.aspx?Item=N82E16820231207