My biggest concern is will it be smarter to start from scratch or upgade my graphics?
Ive always done budget building but I kind of want to step up and get a great machine. Not to great but around $1000.
If you want a great gaming machine, get a new PSU (per above) 5850 (along with everyone else scrambling to find one in stock)
Another option would be to get the 5770 and NO power supply. The 5770 only takes one 6 pin. It will still be significantly faster than your 8800. I replaced a 9800 with a 5770 and it is a substantial improvement (though not doubling like a 5850 would be).
Another smaller improvement is to replace the CPU with a PhenomIIx4 955. Some games that would help on and some not.
dnd is correct,i went from a 955b.e. x4 to a 710x3 with my diamond 5850 and noticed no difference in games. benches went down, but duh... the triple cores work well. get a 5770 and you can keep the power supply. or get the 5850 and a 600watt psu and be setting pretty.