The minimum I would choose for 1920 x 1200 at "high" settings, is an ATI 5850 or nVidia 470. The 5770 strains a bit more with each new DX11 game that is released. The 5770 will serve you well for just about all DX9/10 games....and since there are only a few DX11 games, perhaps you could get by playing at either educed detail settings or even 1650 x 1050 is you find the fps inadequate.
@ sky01454: There is no sensible upgrade from the HD4850 within your budget.
Neither the HD5770 nor HD4870 are going to give you enough of a boost to warrant the money spent, much less the GTX260, which is the Nvidia equivilent.
More information would be helpful, though: CPU, Memory, PSU (make and model, not just Wattage), monitor resolution and OS.
Really, if you are going to upgrade from the 4850, a 5770 is only a minor upgrade for the price of $150. If you want to upgrade, you generally want to go at least a couple of tiers up from the card you have currently (check the Tom's graphics card hierarchy on the best graphics cards for the money article) otherwise you won't really see much difference. The minimum upgrade you'll probably want from the 4850 is a 5850 or better, and thats a LOT more money. A 5770 will serve you fine a 1920x1200, but you may have to reduce detail and quality settings a bit on some games. The cheapest card that will run 1920x1200 really well is probably the 5830, but at that point you might as well go for the 5850. I'm not totally sure about GDP prices of cards, but I don't think you'll get much better than the 5770 for that price.
CPU: AMD Phenom II x4 965 Black Edition 3.4Ghz
Motherboard: Asus Evo (Socket AM3) DDR3
RAM: 2GB Corsair 1333Mhz
Hard Drive: 500GB Seagate Barracuda
GPU: Asus HD 4850 512MB GDDR3
PSU: Coolermaster Xtreme Power 500W (I know its lousy)
Case: Coolermaster Sileo
I will spend about 200 Pounds on a GPU if it is benefical
If you can get a 5850 in that price range, do it (not sure what prices are for the cards there). If you can't get a 5850, I'm not sure. You could get a 5830, but its not that much better than a 5770 to warrant the price increase, but the 5770 isn't worth the cost for upgrading from a 4850. 200 Pounds ~= $300 which is the price of a 5850 here, but I'm guessing its gonna be a little more expensive there. Its probably worth it though- try for the 5850:-)