If he's playing at 1920x1080 resolution, I'd be comfortable going a bit beyond those and recommending anything up to a 560ti or 7850 (basically any $200 ish GPU or below). Some games will be bottlenecked of course (for example RTS games), but demanding ones like BF3 or Crysis 2 will make fine use of the extra GPU horsepower.
Bottleneck is not a good term. It implies that a graphics card can cause less performance.
What you are asking is at what point do I get diminishing returns for the incremental dollar.
The graphics card will not cause a bottleneck, regardless of how strong it is.
Stronger cards give you better average fps, higher minimum fps, and more eye candy.
Buy the strongest card your budget and psu will allow.
If your budget is $300, look at the newly launched GTX660ti.
GTX 550Ti is an ok card but it is already at it's max unlike a 460/560. You can get a normal gtx560 non ti for a similar price as the old 460 but if you are expecting to make do around $120 then your options are limited.