Look into a FX5700 ultra from Nvidia, its faster around the board then the ATI cards are, and after there messup with the 5800Ultra, now all the FX Cards have a decient cooling system. Another card that you may want to look at is the FX5900VTD (i think thats the lettering) from MSI, its only $250 here in canada, so I imagen you can pick it up for like $160 or so in the states. Its a great card, and with a little tweaking / overclocking you can potentially beat out a 9800XT (however in your case, OCing is probably not the best option). now onto other things.
For photoshop you are going to want more then 512mb ram. thats for sure. I do quite a bit of photo editing and have ran way over my 1gb RAM mark. I am looking at getting another 1gb / taking out the gb thats in my gaming comp and using that. 1gb is a near must now especially if you have PS 7/CS. If your not going to be OCing and gaming is not your forte then go with some kingston value ram / corsair value ram. The price / performance difference wont be VERY noticable in photoshop and I can guarentee that you would notice better performance with 1gb of Value DDR400 then 512mb of Fast DDR400.
Also, look into getting a second harddrive to store your Photoshop swap file on this is a huge timesaver. a WD40JB or some other 40gb HDD /w 8mb cache would be a huge help. if your going to be doing a lot of high sized work with pictures, it might even be a better idea to look into a small System drive and a large pic / swap file drive (aka 40gb System and a 120gb Storage) 2 HDDs are prefered over 1 partitioned, because of the windows swap file. that thing can get very annoying. Also make sure that they are on seperate channels to insure speed.
Other then that, it looks like a wicked photoshop machine. One that I would quite like to have
