PhysX is a way to make more realistic graphics (Google Batman Arkham Asylum if you want an example-there are tons of vids and explanations).
Now in real world, there are very few games that actually use this technology, and those that use it, use it in various degrees. Some are very noticeable (Mafia II/Batman AA for example), and some you really can tell the difference. I don't think its worth it as you take a HUGE performance hit if you don't have a powerful nVidia card. For reference: I have a GTX 460 and with Batman AA, it was pretty cool, but even OC'ed to 850 core, 2000 memory it struggled to keep my target 60 FPS at max settings (Max PhysX/Max AA/1920x1080). I could easily dip down into the high 30's in very PhysX intensive areas. Now you might say that over 30 is great, but for me I want 60
. I have very sensitive eyes lol.
Now with a special patch you can buy a separate nVidia card and put in in a spare PCI-e slot and use that for a dedicated PhysX card. The problem being, you need a decent card to do this, which can increase the cost exponentially with little benefit. Here is a good Tom's article on doing this if you are interested:http://www.tomshardware.com/reviews/nvidia-physx-hack-amd-radeon,2764-8.html
If you do not use this patch and keep your ATI card, you will be using CPU PhysX (for those games that even support it) which will drive your processor to its knees and decimate FPS.
Any nVidia card with CUDA (And within three generations i believe) can do PhysX if I'm not mistaken, and if I am, im sure someone can correct me