These are 2 very different things that he wants the computer to do. Transcoding/ripping is all about HDD throughput, and processor. Gaming is all about GPU, with a quad core processor being required. If it is a tight budget, consider carefully what the primary use is, or he will be forced to make cuts which could make the computer suck at both.
I would find the cheapest board possible that supports sandy bridge and RAID. If the budget allowed and this is going to be a long tearm investment (5yr) then I would splurge for OC and SLI abilities. Not much worst than having a platform you max out when you need more performance, but are not financially ready to move up to a new platform.
While I am an nVidia fan, I would suggest an AMD GPU if your friend is on a budget as you get more bang for the buck, and a lower power draw.
Buy 2 2TB drives in Raid1 for transcoding and storage (3TB if budget will allow). If he is doing video, then space is worth gold! It will not help your write times, but it will kick more data to the CPU which will help the overall conversion time, as well as providing redundancy for the data he creates. Also, have a separate system drive, and seriously consider SSD! They are a dream to use! 9 out of 10 times it is the system drive that fails; Protect your data! Especially if this machine will be the 'home' of said ripped content. I know I am beating a dead horse, but as someone who does video on the side, it is astounding how small 1TB drives are. I have 2, and while the first one took a good few years to fill, the 2nd filled almost instantly, and I never know where to put anything. I actually deleted my small 600GB movie collection to make space (I still have original discs, and have learned a few tricks, so next time the process will go better), and that is a problem nobody wants to deal with as cheap as drives are now. Personally I do not have redundancy (built this machine originally as an entertainment PC, not as a workstation), but that will be top priority on the next build.
Games mostly rely on the GPU, so getting a non-K i5 is just fine.
Consider more RAM. It is cheap, and while he may never NEED it, it would be a dumb thing to run short of when the prices are so low. I personally run 4GB of ram, and while I generally stay in the 1-2GB range, current games do run into the 3GB range, and will only go up exponentially in the future. 8GB seems to be a good amount for a moderate gamer.
Lastly, while I am a HUGE Intel fanboy, consider AMD. Bulldozer will come out eventually (supposedly in a few days/weeks), and your friend is going to kick himself if he finds he could buy a cheaper AMD chip, and overclock it to match a nice i5. Also AMD motherboards tend to be much cheaper. Between the two you are talking enough money for extra RAM or more HDD space, or a coveted SSD system drive. Either way, it wont hurt to wait a few weeks. If bulldozer is good then you can go with AMD, if bulldozer sucks then Intel is still going to drop prices a little, which will still save some money in the end. I wouldn't wait forever, but as it is so close why not?