460 should serve you well. Maybe still a bit overkill for the resolution, but I'm doing the same thing (1280x960, though can go up to 1600x1200).
Excellent bang for the buck, that one. ATI has the 5830 at the same pricepoint, which doesn't keep up in performance and doesn't offer perks like PhysX.
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Contritium praecedit superbia.
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