Agreed, up to a point. The 'pure budget' option as you mentioned would probably be an Athlon II with AM3 760g - still a big performance leap for this machine!
I have some bits I can reuse - OCZ 500W psu, monitor, case(maybe), OS, but I have deliberately not given myself a budget because the old machine really owes me nothing and has performed well for (most of) its working life - I think it must be at least 8 years old!
So while I am not going to go mental, I am happy to spend money where it is sensible to do so given the kind of stuff this machine is likely to be doing and the life expectancy I hope to get. The rate of development of the various technologies seems to be accelerating so I am not banking on getting 8 years of of the new build.
In light of what CAT has pointed out, the 880g chipset does not seem as good value as I initially thought. It may be that waiting (for a bit) is the better option, there is no deadline and no shortage of other computers in the house.
I havent had a chance to fully digest the monolith that is the current Bulldozer thread, but I will.