I think I may be of some assistance to you in regards to making this decision.
My brother and I both have Samsung SyncMaster LCD's. I have a 20" and he has the 22" version. I’ve played a lot on both. Even though both monitors have the exact same specs other then screen size, I can tell you that I prefer to play on my 20" because things looks crisper (I believe someone mentioned this before). As far as screen size goes, I really can’t tell that there is a difference in viewing area unless I am looking at the monitors back to back. In fact when I got my monitor my brother thought I had the exact same one he has.
Anyway, my point is that you can save money by getting a 20" over a 22" while still having the advantage of using a higher resolution monitor with a larger viewing area (vs. your current monitor). Now, you might think that "well 19 inch vs. 20 inch isn't much difference", but it’s much more then just 1" if you think about it. The viewing area is measured from corner to corner at a diagonal slant. Due to the fact that you are going from a standard 4:3 monitor to a 16:9/16:10 monitor, you will notice a MUCH larger difference then if you simply went from a 19" to 20" 4:3 monitor.
Add in the fact that you will be viewing things at a much higher resolution; you will be amazed at what a difference the screen upgrade will make.
But back to the point at hand... save yourself some cash by going for the 20", 1680x1050, wide screen monitor, then use the surplus to get a video card which will play the latest and greatest at your new resolution. For that application the ATi 4870 or the Nvidia 260GTX will fit the bill... HOWEVER
so will a 9800GTX
... and that’s good news for you! The 9800GTX has come down in price by a LOT lately. You can get one for well under 200 bucks right now (see below).
A 9800GTX is more then enough power to push a 1680x1050 monitor to a 60FPS average in basically every game out (as well as those which are still yet to be released), at it's respective maximum detail level including AA and AF (except Crysis of course, you would need to disable AA for that).
Here is a good example of what I am talking about
That’s a brand new, in the box, 9800GTX for $185.00! Given that this card was almost 400 dollars 5 months ago, that's an AWESOME deal if you think about it.
Oh, and here is the EXACT same monitor I am currently using for only 173 bucks!
That's the Samsung SyncMaster 206BW. It’s a 20" wide screen LCD monitor with a 3000:1 contrast ratio and a super fast 2ms response rate (this is important for gaming LCD's because slow rates gets "ghosting" and motion blur. There is NONE of that with this monitor)... and FYI, I bought this monitor for almost 100 dollars MORE then the current cost here a little under 5 months ago! If you get this one, I hate you for that. LOL.
If you take my advice and get the Samsung SyncMaster 206BW 20" LCD and the Nvidia 9800GTX video card, you can get BOTH products for about the same cost as a single 280GTX! You can shop around if you like, I am sure you will be able to find these products for a LITTLE less then what I found, but ATM these prices (which I linked above & below) are REALLY good.
So, basically, you can get your self a monitor upgrade AND a VERY GOOD video card upgrade for roughly the same amount of money your parents were willing to spend on a single 280GTX GFX card! Talk about having your cake and eating it too, eh?
9800GTX @ $186:
Samsung SyncMaster LCD @ $173:
edit: BTW, by sticking with Nvidia cards you will be able to keep that 8800GT and use it as a dedicated PhysX card. You wont be able to do that if you get an ATi card as your upgrade. Granted, PhysX is still new tech, but the drivers are being improved upon every day and this dedicated PhysX video card deal will be more and more of a performance boost as time passes. In any case, by getting that 9800GTX you will be able to have your dedicated PhysX card basically for free! This is just icing on the cake so to speak. So, if you look at it this way, by getting that 9800GTX, and keeping your 8800GT as a dedicated PhysX card you will be getting an even better performance boost then by simply swapping out your current GPU for a new one!