I have built many computers, but have never really built one for gaming. I've heard different things about processor needs for gaming lately, as some folks think the P4 is still the best with its HT. I don't know how the new dual cores work with gaming, and would appreciate some assistance. I'm guessing I can spend $200-300 for the processor itself, and can work in the mainboard and RAM around that. Thank you.
P4s are definitely not the best, old technology. Intel Core 2s are the best processors at the moment. Possibly the E6400 or E6600 for you...
Depending on your budget, you can either go for the Athlon 64 X2s or the Core 2 Duo's. P4 is obsolete now. For about $200, you can get an Athlon64 X2 5000 or a Core 2 Duo E6400. The E6400 is well matched for the X2 5000, but also overclocks well. But if you want more performance go for the E6600.