Is it better to buy an i7 860 or an i7 920? Right now I have an AMD Phenom II X3 705e.
For most overclockers, it's better to buy the I5-750. With the i5-750 you lose Hyperthreading (you have four actual but no virtual cores) but gain overclocking capability. And you save money. And, your processor runs cooler at full load.
I've used all of those processors. My i7-860 was a complete dud and wouldn't go past 3.9 GHz no matter how much you cooled it because it didn't like added voltage. And while I've never had that problem with an i7-920, Don Woligroski just did. I think you're more likely to get a dud i7-860 however.
Like I said, I'd get the i5-750 and enjoy the better overclocking and cost savings. Here's some other stuff to consider:
1.) How many video cards do you want? LGA-1156 supports a single graphics card at x16, or two at x8 PCIe transfers. Tom's has done a BUNCH of tests and shown that you lose up to 8% by putting two cards in CrossFire on x8 slots. The slower your cards, the less likely you are to notice any performance difference.
2.) Another set of tests proved that the x8/x8 performance loss with high-end cards can be fixed by adding a PCIe bridge (NF200), most likely because both cards receive exactly the same data. In this instance, the bridge is taking in data at x16 mode and repeating it to two cards at x16 mode.
So now you have even more options: If you want the Crossfire performance of an LGA-1366 platform on LGA-1156, you need to pay extra for a board that has the NF200 bridge.
As for your memory question, I've done EXTENSIVE testing on RAM. My findings are that the best 2GB single modules for the money all have D9KPT chips. Specifically, the best 6GB (triple channel) kits for under $200 and the best 4GB (dual channel) kits for under $150 all use the same D9KPT memory. And a bunch more testing has shown that HEAT SPREADERS HINDER PERFORMANCE ON D9KPT MEMORY. Because of that, I only recommend two sets of memory that use D9KPT chips and have no heat spreaders: