intel i3 vs i5 & 2nd gen cores HELP me!

I agree with @dbmarquand that for a budget computer AMD is the way to go. For about $170 you get a hexacore CPU that is almost on par with a core i7.

I'm using this processor and it works fantastic. It's a great overclocker as well, I get it too 4.5GHz easily and I've yet to seen someone with a more powerful CPU for that price.

The i3's are dual-core, but each core can handle 2 threads, allowing them to act similarly to a quad-core. They'll never be as powerful as a true quad-core, but more powerful than dual-cores without the extra threads. The i5's are true quad-cores without any added threading capabilities. The difference between the generations of Core i-series processors is that the architecture for the 2nd-gen parts is much more efficient, allowing the chips to be more powerful than 1st-gen parts at the same clock speed.

Why would you get an Intel CPU while on a tight budget? You could get a monster AMD quad core for like 180?

The difference is in the architecture, the way the chip is threaded and the graphics integrated.

You can get a Dell Inspiron 620 for $450 right now. It has a 2nd generation core i3, 1TB HDD, 4GB RAM, 8 in 1 media card reader, 16X superdrive, Windows 7 Home Premium, 5 in 1 sound, mouse and keyboard. If you really wanted it to be a killer you'd have to upgrade the CPU and install a dedicated graphics card.

It also doesn't come with a monitor but for $450, it's a hell of a good computer . The 2nd gen core i3 is hyperthreaded, and it has a ton of great features. Plus you can always upgrade later, and you'd have a good foundation to build on. You hear a lot of people knocking Dell, and rightfully so, but it's their laptops that have the problems, the desktops are fine.

You should also look on Nextag, and Tigerdirect. I really think for the money the Dell Inspiron 620 is a good choice though. Buy it, build on it.