Here's the bottom line: the 785G is a welcome update to a highly-regarded IGP, but with no more raw power than the 780G it will replace. The 785G is essentially the 780G chipset re-introduced with a number of attractive features, and it looks even better beside AMD's value-oriented Phenom II and Athlon II processors.
Is the 785G the best IGP out there? The answer is going to depend on what the PC will be used for and whether the apps you want to run work better with a Phenom II or Core 2 processor. With this in mind, let's examine a few of the primary reasons someone would want an integrated chipset, and specific recommendations for those applications.
Home Theater PC:
Which IGP is the best in a home theater PC? At this point I would have to say Nvidia's GeForce 9300/9400 and the 785G are running a close race, with the G45 slightly behind both due to a lack of picture-in-picture acceleration and a lower video playback quality (we'll explore this HTPC Blu-ray playback on these IGPs in a dedicated article in the very near future). Despite the update that 785G does not, in fact, feature eight-channel LPCM audio output, this remains a feature limited to a certain class of HTPC enthusiasts who run more complex speaker setups.
If money is a factor and eight-channel LPCM isn't necessary, then the 780G is the way to go at prices far below the GeForce 9300/9400.
Low-Cost Gaming PC:
For this specific use, I'd recommend skipping IGPs altogether and opting for a non-IGP motherboard of your choice in addition to a discrete graphics card. The Radeon HD 4350 is far more powerful than all of these IGPs, and can be found for under $35 online, while $50 gets you into Radeon HD 4650 territory and true 1280x1024 gaming. If you really don't have the $35 to spend, I'd recommend the 780G with a solid overclock to the graphics chipset. If you can't afford a discrete card today but plan on multiple cards in the future, the 790GX is the way to go with its dual-card CrossFireX capability.
As a general, all-purpose PC for the home, I'd recommend the 780G or 785G, and not because of the chipset so much as the low cost of solid CPUs that drop into them. The Phenom II X2 and Phenom II X3 really do offer a great deal of performance for the price right now.
While Intel does offer its own low-priced Core 2 and Pentium dual-core gems, the G45 trades off too much in the graphics power department to be attractive, and the GeForce 9300/9400 motherboards are inexplicably expensive. The cheapest 780G motherboard is $45 less than the cheapest 9300 motherboard we can find, which is almost the cost of a discrete Radeon HD 4650.
In the final analysis, the 785G is a fine addition to AMD's chipset portfolio, and is perhaps most compelling for home-theater enthusiasts.