Ok, the ati x850 cards ARE vastly superior to the x1600, as the x850 (PE, XL, et al) were top of the range, whereas the x1600 is the middle (and has the scathing reviews from both jounalists and gamers to prove it). However there is a but, Ati's cards did not start supporting SM3 (which most of the newer games make use of) until the x1000 range, the x850 will still play the games, just without sm3 support.
With nvidia, the 7600 is better than the 6800 (according to the reviews), both have sm3 support.
Basically, it is down to the x850 or the 7600, with the sm3 support in my view the 7600 would just edge out the x850, if I had to choose. But if you can get a great deal on the x850 (esp the pe, great oclocker) you will not be sorry, just remember that it is getting on now and will show it's age faster than the 7600.
I realise that I have prob muddied the decision making process even more, but I hope this helps.