I've been out of the hardware loop for a while, but was looking to help my bro build an inexpensive gaming rig. Price point is around $500.
I grabbed all this just from newegg.com i'm sure prices can be found better if look a little more:
AMD Phenom II X2 555 BE - $100
GIGABYTE GA-790XTA-UD4 - $125
G.SKILL Ripjaws Series 4GB (2 x 2GB) 240-Pin DDR3 SDRAM DDR3 1333 (PC3 10666) Desktop Memory Model F3-10666CL8D-4GBRM - $109
SAPPHIRE 100283-2L Radeon HD 5770 1GB 128-bit GDDR5 PCI Express 2.0 x16 HDCP Ready CrossFireX Support Video Card - $160
CORSAIR CMPSU-650TX 650W ATX12V / EPS12V SLI Ready CrossFire Ready 80 PLUS Certified Active PFC Compatible with Core i7 Power Supply - $90
As for his gaming habits I think he's going to be heavily into Starcraft II. Currently he has an OLD Sony 19'' CRT. So probably get a new LCD monitor run at resolution 1680x1050.
As far as I could tell this was the best I could find doing some quick research and for that price point. If anybody has some other suggestions especially for the motherboard as 99% of the features aren't going to be used. He's not exactly computer savy.