The Core 2 Duo E8400 beats the Core i7 920 in older games or games where less than two cores are used, but anything that uses three or more cores or a CrossFireX/SLI setup will perform better with an i7 920. I suggest you go for the Core i5 750 which is $100 cheaper, and is just as adequate for gaming.
The i7-920 is better in every way than the E8400. The firstname.lastname@example.org will execute instructions at 10% or so faster on a clock for clock basis than the E8400@3.0 because of the better nehalem architecture. If anything is multicore enabled, it is a runaway winner. As to price, you can get a i7-930 currently at microcenter for $199 if one is near enough to walk in and pick one up.
All that said, Most games depend much more on the graphics card for performance than the cpu. Even the E8400 will do well most of the time.