I'm in the same boat as you.
Why not either wait until the E6600 drops in price (April) or buy a E6300/6400 instead and overclock? The money saved will boost you graphics card budget quite a bit.
The new 320MB 8800GTS is out soon, and you might then have enough for that. It'll smoke anything else around in that price bracket - including the X1950XT.
The 8600 will also be out in a month or so, so again, it makes sense to wait. It's not as if there are a huge number of games out there right now that are crying for the upgrade.
IMHO, waiting a month or two at this moment in time is the best thing to do.
Nomadd