Why do you recommend an i5 versus an i7? My video card right now is the SAPPHIRE Radeon HD 6850 1GB. I should clarify that I'm looking to future-proof my PC so that I won't have to make another upgrade relatively soon, thus the pull for the i7.
Because an i7 is just an i5 with hyperthreading enabled. Every benchmark you will come across for games shows hyperthreading have zero effect on gaming performance. It really helps for video conversion and say CAD, etc, but not at all for games.
If you have $300 to put into the system, you are going to get a lot more bang out of upgrading the video card. i3 is still a very capable gaming CPU. 6850 is more of a bottleneck for games than the i3 at this point.
Selling your current CPU and GPU should net nearly $200. Add that to the $300 you would spend on the i7 and you have enough to go i5 + a very high end video card.