The only difference between AMD 64 3000 and 3800 is the difference in speed, from 1.8GHz to 2.4GHz. This means that if you are somehow able to raise the CPU speed to 2.4GHz then your CPU is more or less as fast as the latter(the only minor differences will be on the account of usage of memory dividers while overclocking etc). This is practically a very very possible aim and commonly achievable. Current AMD 64 CPU's are bases on the Venice core architecture and it is common to go as high as upto 2.6-2.8GHz. 2.4GHz is almost a garuntee. Another important thing is that even if you get the AMD 64 3800, there won't be much speed difference after overclocking both CPUs and another thing is that the AMD 64 3800 need not overclock more than the 3000. 3000 in turn is a lot cheaper and gives you decent performance in todays' games and can play most/all games at maxed out settings if you have that kind of graphic card and have your CPU at 2.2-2.5GHz speed.
Since your budget isn't very high, it is advisable to go in for AMD 64 3000 as for gaming the graphic card is basically the main thing which counts. However you need to couple your CPU with a motherboard that supports overclocking and preferably with a good cooling solution as well to get maximum overclocks. It is always better to go in for overclocker's RAM as well. But since you don't have the budget for that expensive RAM and cooling at the moment, just go in for a good overclocker's motherboard. In the value section, Asus A8N E should more or less be your best bet. It costs around 5.5k and a second hand one may be available around 4.5-5k. Make sure that you only get the Rev 2 or higher in case you go in for a second hand one. AMD 64 3000 should cost around 3.5-4k. Making it a total of 9k+.
In the price range of 8.5k, you do get a CPU which I would definitely take over the AMD 64 3800. This is the X2 3800 which is a dual core CPU, and has 2 cores each of 2GHz. Now you will obviously think that 2 cores of 2GHz > 1 core even @ 2.8GHz. However this need not be true. Most current games don't make full use of dual cores. As a result for most games the X2 3800 will perform close to a single AMD 64 3200 @ 2GHz. However X2 3800 is surely any day better for multitasking, but that is not your priority anyway. Some current games do show a performance difference with X2 3800, which may be in the form of 10-20% faster FPS(frames per second, or the speed in layman terms), but justifying the extra price for that much performance difference whien money is a very tight constraint, doesn't make it good enough. Some games can show a increase of even 30% performance in terms of minimum FPS. This means that when the game is at aa very CPU intensive stage, a single core CPU may be slow at those moments but the dual core will be able to manage a much better position. To top it, X2 3800 can be overclocked as well, if you are lucky then even upto 3GHz, but only if you are very very lucky and with after market cooling. For you the practical maybe 2.2-2.7 or so, or maybe 2.4 or so, depending upon your luck on the peice you get. Another plus is that for the upcoming games of the near future it will be much better.
But if you keep in mindthat most current games will run fine with the single core CPU, and after overclocking it, it won't perform as bad even in some CPU intensive titles and adding to it the fact that you are getting a good overclocker motherboard and a much better graphic card, it according to me becomes a much more recommended solution as compared to the dual core for your budget. AMD 64 3000 + 7600GT > X2 3800+ 7600GS. It is true that at lower resolutions which these cards offer especially even the 7600GT in the near future, the CPU becomes more prominent. But a the moment the 7600GT is not that bad a card and will let you play your game fine at 10X7 Med-Max. This certainly does make the AMD 64 3000+Asus A8N E+7600GT(or X1800GTO) your best bet.
However do keep in mind to power this system with atleast 1GB ram(try to stick to transcend, this mobo doesn't support corsair value select atleast back then). To make full use of this system you need 2GB ram. Get the Seagate Sata II NCQ 250GB for Rs.3800 or so. Get atleast a good quality 400-450 watts power supply to power this system.
These are socket 939 motherboards that I am talking of and only support DDR memory.
Another alternative you have is the Intel Core 2 Duo E6300 + Asrock 775 + DDR 2 ram, but that alternative may be a bit more pricy that the single core and the asrock doesn't let you overclock much either, but it is still better than the single core combination and maybe equivalent or almost as good or maybe even better than the AMD dual core depending upon what overclock you are able to get with the AMD dual core. The intel is 2 X 1.86GHz and may reach upto 2.1GHz. But since your budget is really tight, it may not be advisable to go for this.
Also, keep in mind that with 512mb RAM you will have trouble playing todays games like BF2, FEAR, GRAW, and almost all decent games out by now, even if you have the fastest CPU and GPU in the world. You need to get atleast 1GB and for full potential exploitation even 2GB of RAM.
