Depends on what you can afford. I was recently forced to build a new system and I was only able to scrape up about $800 for it. I went with an AMD 2200XP and an ASUS MB, 1G of RAM which runs in dual-channel mode (do this if you can), and a nVidia FX5600 w/128Mb.
It's been great with everything I do on it so far. I was coming from a PIII-450 so the increase in performance is quite noticable. I decided to buy a good case and power supply this time and I think that was a really good decision. I got the Antec Sonata (piano black with front panel connectors and blue headlights) because it came with a really good quality pwr supply and wasn't that much more than the supply by itself. ($96 on sale) With a DVD burner, floppy, SCSI card and DVD player (had to get a black one
) it was right around $800.
I have a 21" monitor and wouldn't consider anything smaller but I do graphics for a living and the extra size makes a huge difference when you're working with files that are several square feet at 600dpi (the processor and memory make a huge difference too).
I haven't played with any of the flat screens because they don't calibrate well for CMYK. I'm stuck with a CRT until they make plasma screens more available (and affordable). But I'd recommend you get as big a monitor as you can fit on your desk. The 22" flat screen CRT's are awesome (View Sonic and NEC) or a 21" Sony. Then you can run at 1600x1200 and still see the text...