The HD5770 would be a good choice as wa1 said. The 8800GT was probably struggling with current games a fair amount at 1680x1050 while the HD5770 should do very well and also give you DX11 compatibility(although you wont be able to use it until you upgrade from XP.)
Yes, it is the latest series by ATI. Nvidia has yet to release any cards for their new series in the price range you are looking at. The closest is the GTX 465 for $250 but for $100(66%) more you'll only gain about 20-25% in performance over the HD5770. For something better that's more reasonable in price/performance you would need to spend $300+ for an HD5850 or GTX 470 but I don't think that is really necessary at your resolution.