However, if you are going to spend that much you might as well spend a little more and get the i5-3570k which allows you to overclock and get even better performance.
Of the two though, if you are looking for the best bang for the buck, then go for the PII X4 965.
The X4 965 is currently selling for $89 (using the coupon code included in the link below), while the i5-3470 is selling for $199. The i5-3470 costs more than 2x the X4 965, but it's raw CPU performance is not more than 2x better.
Depends where the the OP is... in the UK, ~£90 for a 965 (if you can still find one) vs ~£140 for the i5 (Aria actually had a 3450 for £125, might be worth checking if it's still there). I'd definitely get the i5 - easily the superior processor.
Depends what you are doing if it is gaming then it depends on the Graphics Card (GPU) so the money saved getting the Phenom II can buy a better GPU which could mean it games better than the i5
for example
Phenom II £65
GTX660ti £230
Total - £295
i5 3450 - £140
650ti - £130
Total - £270
The AMD above will game at higher settings in the majority of (GPU bound) titles, despite it being the weaker CPU.
TLDR - If you are gaming the GPU matters so your question is incomplete we would need to know the total budget so we could pair the CPU with a card. Raw performance the i5 is better though