Is this Build Functional/Balanced?

It's a great build! However, you might want to save some money by going with an i5 2500k:
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
instead of the i7 2600k. The performance difference btwn the i7 and i5 is not noticeable unless you're going to be doing multi-threaded tasks A LOT. In gaming performances, the i5 is the better "bang for your buck" CPU.

If you don't care about the brand of the Motherboard, then you can go with the ASRock Extreme 3 which is $25 cheaper and has a lot of fuctions (PCIe 3.0/SLI and CF capabilities):
http://www.newegg.com/Product/Product.aspx?Item=N82E168...

build looks okay.
2600k might be a bit overkill for gaming. but it's (and the gtx 570) good for rendering, image editing tasks.

^+1 Roaring and de5

As for the rest of the system, drop that PSU, not worth the cost at least. Price/performance is a bit too much. Save and go with this PSU instead, just as good and still modular.
Silverstone ST85F-P 850w 80+ Silver $145
http://www.newegg.com/Product/Product.aspx?Item=N82E168...

On the HDD, WD Blacks are still not worth it, specially for that extra $60 you'd pay vs others. Granted it's SATA 3 but Mechanical HDD's (Drives that spin at an RPM) don't take advantage of SATA 3 well, SSDs do, but not HDDs. Save and go with this: Seagate 1TB SATA 3 $135
http://www.newegg.com/Product/Product.aspx?Item=N82E168...

Nice 2500K+8gB DDR3 1600 combo to look at:
http://www.newegg.com/Product/ComboDealDetails.aspx?Ite...

You may or may not want to wait for the 7950 or 7870 to make your decision. It seems like this generation AMD has an answer for CUDA but just a suggestion.
http://www.anandtech.com/show/5261/amd-radeon-hd-7970-r...
Just a synthetic to show the improvement. That doesn't include the fact that the 7xxx will be 28nm (Overclocking, efficiency, lower TDP, cooler).

I'm planning to build this system in the next few weeks... some time during February. Should I stick with integrated graphics on the Z68 chipset and wait until the next generation of GPU's come out (probably NVidia)? Or are the performance differences going to be insignificant?

Well, it's hard to say. Nvidia has yet to give some performance numbers, 6xx being planned for mid 2nd Quarter or 3rd quarter. So it's hard to say. May I just ask why AMD is not an option for you?

Based on what I've gathered from this forum, your non-gaming tasks might benefit from 16GB RAM if that fits into your budget.

He's going to use the build for gaming more than video editing, so he wouldn't need 16GB of RAM at the moment. He can use the saved money to get better parts that will actually boost the performance of the PC

Oops... I meant AX750 for the PSU.

Silverstone ST85F-P 850w 80+ Silver $145
http://www.newegg.com/Product/Product.aspx?Item=N82E168...
OR
OCZ ZT Series 750w $110
http://www.newegg.com/Product/Product.aspx?Item=N82E168...

I would get these over the AX750 just because of pricing reasons. (Price/Perf)