The K cpu's can be overclocked to a higher frequency. i7 cpu's are for multitasking , video rendering and high demanding cpu softwares and programs.The i5 cpu's are the best bang for buck in gaming PC.
Definitely. The only reason you would want to get a discrete one is if you were doing like sound manipulation and rendering (or whatever they call it) full time. Also, I think the 560ti will bottleneck the i7, so I'd go with the radeon 5870 or 5850, or the nvidia 570. The i7 is a REALLY powerful processor, and so I'd recommend, as others have said, the i5 based on your priorities. Now if you had put video or 3D editing on the list, going with an i7 would be better if you have the budget.