Of course AMD is the cheaper option and they performe pretty well to, the new Phenom II's are very cheap and offer some good performance and am hearing people OCing it to new heights.
While Intels options can be a more expensive they do offer better to equal performance(the core 2's being equal to the PII's) while the i7 is more expensive it does push ahead of the Phenom II's, if you are a gamer, it might not matter as much, you will be good with a Core 2 or AMD's Phenom II, i7 is a pretty good gaming CPU, But, i would personally recommend if you are also doing more things, like encoding, CS3 and really CPU intensive tasks, cuz thats where the i7 really shines. The Phenom II is actually a good CPU for gaming as of now, cheap with same performance as Core 2, so if its Intel's Core 2 or AMD's Phenom II, i guess it really depends on you, if you already own a AM2/AM2+ motherboard the Phenom II should be right up your ali with a simple BIOS update, while the Core 2's still have a lot of life in them, Intel will eventually move over to the i7 and the i5(the cheaper i7 basically) platform. But, even when they do that, a decent enough muli core CPU( the Core 2's) will be able to handle most simple tasks even when the i7 becomes the norm of the CPU world, but as i stated before it depends what its going to be used for, when multithreaded games come out, the i7 actually may be a great performer in games, the HT makes it into 8 threads and it has 4 cores so it should do well in the future will gaming, but the Core 2's should still be keeping pace. As for AMD, we will have to wait and see the Phenom II AM3 CPU's with the DDR3 memory, i doubt the DDR3 will help AMD catch the i7, who knows, maybe once it is out, it will kill i7. Or maybe it will come close to the i7 and be cheaper in price overall, making it a still worthy gaming rig. AMD will have there winning formula soon tho, and really at the end of the day the consumers win in the end. Weather your a gamer or a video encoder the CPU's are getting better, weather you are for AMD or Intel. As a gamer i have no problem with either company, i just went Intel because at the time i was going to build a new rig Intel was on top(and still is as of now), but i have no problem switching over to Phenom II, but it doesn't offer much of a difference from my QX6700 so there would be no point IMO.
Sorry for the wall of text.:shadedshu AMD and Intel FTW.