Like Katze said, you're not gonna need to go i7 and you won't really be able to with that kind of budget. SLI isn't needed unless you're playing at high resolutions and want to crank up settings in games
If I had a grand sitting here, this is a build I would go with (based on what you said you'll be doing with it).
Case:
Newegg.com - COOLER MASTER Centurion 590 RC-590-KKN1-GP Black SECC / ABS ATX Mid Tower Computer Case - Computer Cases
Mobo:
Newegg.com - GIGABYTE GA-EP45-UD3P LGA 775 Intel P45 ATX Intel Motherboard - Intel Motherboards
CPU:
Newegg.com - Intel Core 2 Quad Q9550 Yorkfield 2.83GHz 12MB L2 Cache LGA 775 95W Quad-Core Processor - Processors - Desktops
RAM:
Newegg.com - G.SKILL 4GB (2 x 2GB) 240-Pin DDR2 SDRAM DDR2 1066 (PC2 8500) Dual Channel Kit Desktop Memory Model F2-8500CL5D-4GBPK - Desktop Memory
HD1(os drive):
Newegg.com - Western Digital Caviar Blue WD3200AAKS 320GB 7200 RPM 16MB Cache SATA 3.0Gb/s 3.5" Internal Hard Drive - Internal Hard Drives
HD2(storage drive):
Newegg.com - Western Digital Caviar Blue WD6400AAKS 640GB 7200 RPM 16MB Cache SATA 3.0Gb/s 3.5" Internal Hard Drive - Internal Hard Drives
Optical Drive:
Newegg.com - LG Black 22X DVD+R 8X DVD+RW 16X DVD+R DL 22X DVD-R 6X DVD-RW 12X DVD-RAM 16X DVD-ROM 48X CD-R 32X CD-RW 48X CD-ROM 2MB Cache IDE 22X DVD±R DVD Burner - CD / DVD Burners
Graphics Card:
Newegg.com - EVGA 896-P3-1255-AR GeForce GTX 260 Core 216 896MB 448-bit GDDR3 PCI Express 2.0 x16 HDCP Ready SLI Supported Video Card - Desktop Graphics / Video Cards
PSU:
Newegg.com - CORSAIR CMPSU-620HX 620W ATX12V v2.2 and EPS12V 2.91 SLI Certified CrossFire Ready 80 PLUS Certified Modular Active PFC Compatible with Core i7 Power Supply - Power Supplies
Why I chose these parts:
Case: Cooler Master makes some fantastic cases for the price. This one is simple, clean, and does what it's supposed to do.
Mobo: I used to have this board and it was phenomenal. Simple setup, easy to config/overclock/etc and it worked out great.
CPU: Also used this cpu with the previously mentioned mobo. It's a beast. Don't hop onto the i7 bandwagon just cause it's new. Yeah, it already phased out the socket 775 chips, but that doesn't mean they're bad. With the right after market cooler, you can push these chips pretty hard.
RAM: Once again, something I used in the build with the cpu/mobo mentioned. GSkill makes great ram at amazing prices. They can take quite a beating too. OC'ing with these was great, plus they look/feel very nice and durable.
HD1: Well, WD has yet to fail me and I'm a fan of using two drives (os/storage), so I chose a smaller drive. This will allow you to still keep a good amount of stuff on your main drive if needed.
HD2: God I loved having this drive. I haven't had a chance to test the newer version of it, but it has great reviews (and it's $10 more, thus why I chose this one).
Optical Drive: Meh, you don't have to use this one, it's just the first one I clicked. They all do the same shit.
Graphics card: I'll admint, I'm an nvidia fan boy, so I didn't even bother browsing through the ati cards. Yes the 48xx+ series cards are great, but I have yet to be disappointed with the GTX260/280/290 cards. For the price, I think the core 216 cards are awesome.
PSU: Once again, somewhat biased, but believe me when I say Corsair PSU's are AMAZING. And with PSU's you pay for what you get. The price seems a little high, but one, its modular, so you wont be running all of the cables a normal psu has. Two, it's an extremely well built and sturdy power supply. And three, Corsair has great, helpful customer service. Sometimes on hardforum corsair reps will find people who lost a cable or something and tell em they can pm them for a free replacement. Win.
You might be wondering where the OS is. Well, I didn't put one in the build. This is sort of a base design if you will. You can go for some lower priced items and fit the os in there, use one you already have, borrow one, etc. My grand total for the build (with shipping/no tax since I'm not in cali) was $978.43. With cali tax it was 1071.05 Also, there's $70 worth of rebates in there. And like I said, you can modify it a bit to get the price a bit lower, watch for deals, etc, I'm sure you can get a better price if you wait/shop around.