Alternative approach (what I would do): Start with $350 HP refurb i5-2400 or i5-2500 from here (www.ubid.com) (i don't work for or with them, I do buy there). Add the power supply and video given above ($60+$150) total is less than $500. If you buy an HP from ubid make sure it has an HP warantee, not some third party slop. That gets you an HP refurb, not a used POS.
re "I were to bump up the total price from 600$ to 690$ what should I upgrade": At $700 plus for new components I'd move from AMD to intel and keep the same video. Or buy a $185 GTX 560 or $240 HD 6950 1 GB for the AMD build vs. the $150 6850.
If you don't have a good mouse then throw that in too. Good mice are nice.