Official Nvidia drivers will not allow a physX card to be used in the presence of an ATI card. Depending on what your operating system is, you may be able to apply a workaround.
My personal, but very limited experience with ati + physx, is that the physX card becomes the bottleneck, and by using older cards, I was crippled with physX enabled. Since i was looking at a budget way to accomplish it, I wasn't willing to shell for a faster card just to run PhysX on the very few titles that actual utilize it in that way.
The only PhysX cards around are Nvidia's own GeForce, however you'll need hacked drivers to make this setup work. For PhysX I would recommend a GeForce 260, but again you'll need moded drivers so the Nvidia won't detect the ATI drivers and lock you out. In fact any GeForce card that is an 8 series or above would work, it's just that the 260 is the strongest and is in the $125-$175 range.
i have my HIS 5870 with an 8600 gts and also tried the 8800 gts. Havent used anything higher yet. It works pretty nice and tested it out on UT3, some difference on crysis so far. Need to check out something else. the 8600 drops the fps abit and the 8800 is smoother.
no sense in spending that much money on a gtx 260 when I do believe they recommended a 9600GT for good/smooth Physx effects.
Considering how few games there are with PhysX, buying a decidated card is a dubious choice. However, if you are going to get one, know that a 9600GT gives poor results in the only game I used it with, Sacred 2. A 9800GT was almost good enough for smooth results all the time.
I believe the 250 is usually the minimum requirement for perfectly smooth play with physX. That is, unless you play Dark Void, which needs a 260.