First, Sandy Bridge components are starting to hit the market. Look at building an LGA 1155 platform for the same budget as this i7 and you will be at a very similar performance level and more "future proof" than LGA 1366.
That said, that is a pretty solid setup and you would be happy with it! My suggestions are...
MEM - Upgrade to CAS7 modules. CAS8 is fine, but you are already going all out with a "top of the line" build...
GPU - HD 6850 is a good choice. GTX 460 is also a good choice if you are looking for more options.
HDD - No mention of a hard drive. Samsung Spinpoint F3 or an SSD with a SandForce controller are highly recommended.
I will be using 2x WD Black Caviar 1TB 64MB cache in Raid 0 along with 1x WD Black Caviar 1TB 64MB cache in Normal mode. No SSD's for me as of now coz of budget constraints.
I will definitely look for CAS7 modules as the price difference is not much.
As for the sandy bridge that you mentioend, I only read wowwiki O.C. review where overall 17% improvement was noted for I5 2300 when compared with I5 760. I am in office now so may be I will look at the some benchmark reviews when I get home.
If I choose sandy bridge architecture, that would mean I have to choose a different MB. Any options? (Please try to have price range same as Sabretooth mentioned above)
Also the RAID I'll be doing for the first time. RAID 0 vs RAID 1 vs RAID 1+0; I know what they mean but If you were building which one you would go with and why?
The 17% improvement for the I5 2300 vs I5 760 isn't the big part of the Sandy Bridge recommendataion. It is new and processors will be made for some time to come. Going with the 1155 platform now will give you the option of doing a CPU upgrade later that would be worthwhile. The same MIGHT be said for 1366, but not at a similar price / performance ratio. Sandy Bridge motherboards (P67 / H67) will be hitting the market in a few weeks. Prices are expected to be similar to the x58 board you choose above.