How to buy a cheap PC?

OK, I wouldn’t call this interesting blogging, but a question for the peanut gallery:
I’m rapidly reaching a point where I’m ready to buy a new PC. As I (and many others) predicted several years back, the traditional required PC-upgrade cycle has collapsed, or rather, expanded dramatically. My Gateway PIII runs at 800Mhz and is over two years old, but frankly, still works just fine.
But, it seems prices have dropped to a degree that I think I should be able to get a quite spiffy P4 running at least 2.4GHz for under $1000. (Note that I don’t need a monitor).
But the question is, what’s the most cost effective path? Historically, I’ve gone the big-boys route, with machines from Micron and Gateway. But I’m tired of that; methinks I can do much better elsewhere. eBay seems to have quite a few manufacturers who sell cutrate systems that seem reasonable, so that’s one option. And I am in Southern California, with a Frys just up the road, so I’m toying with the idea of getting a system from them (or a bare-bones one that might require a bit of assembly on my part).
Any recommendations? I’d love to find a small build-to-order shop with reasonable prices, so if you’ve bought from one, drop a comment here.
This time around, my primary driver is price; I’m definiately not going for the $2500-$3000 models. So any advice on the most economical options would be most welcome.
And also: Any advice on how to track/predict chip price drops? I know Intel is about to release their latest at 3GHz or so; how do I know whether the price drops that usually will cause in the lower-end processors and systems have happened yet?