SLIed 8800 GTXs will be better by a good margin but they will also use a ton of power and give off a lot of heat. If your case is well ventilated and your power supply capable they are the better choice at 1920x1080 and above. Below that either should be very good so I would just go for the GTX 260 in that case.
Are those your only options? Have you considered ATI cards? They are generally a better value for the money performance-wise right now and offer DX11 support and great power efficiency.
for $120, go for the GTX260. It'll play most things quite well at 1920x1080 and last you well, especially for $120- thats a killer deal. 2x8800GTXs would be fast, but the power usage and noise and heat is what will kill that, especially when you can get the single card for less.
Agreed^ the 8800 GTXs would be faster, but not worth it in the long run.
THe performance differences would be like 280 vs 260, just about, or I would say 285 vs 260.
Not worth it. But I would keep an open mind, seeing as prices always change and I'm sure you can find a 4890 for around that price if you look hard enough, they are already retailing for 150$ now in Canada.