Well, only you can decide how much money you want to spend, but here's the Tom's GPU hierarchy chart: http://www.tomshardware.com/reviews/gaming-graphics-card-review,3107-7.html
Anything you do in the range you're talking about is going to be a massive improvement. You're right that value decreases at the very high end. The 7870 is a pretty great deal, yes, but you can go lower if you want. The 7850's a better value. You'll have to decide somehow where you want to draw the line.
It's good that you're running the 2500K, as it's a powerhouse, but you should do some overclocking if you do a serious GPU upgrade. How's your case ventilation/heatsink setup right now?