While the naming scheme may suggest that the HD 3870 is AMD's new king of the hill, it is not. Certainly the card performs better in some benchmarks than the 2900 XT, but not always. Also a difference of 970 (= 3870-2900) suggests that this is a much faster product. On the other hand performance per watt and performance per dollar have been significantly improved. So overall I would say the RV670 and HD38xx Series are a good step forward for AMD.
Unfortunately the Sapphire HD 3870 is not faster than the GeForce 8800 GT which is sold at about the same price point. I would expect that the HD 3870 price drops soon, also the HD 3870 is in stock now and will be. NVIDIA's 8800 GT is permanently sold out because of limited quantity available. So if you need a Christmas present and you need it now, the HD 3870 is an excellent choice.
For media PCs where HDMI is a must and audio via HDMI is a very important plus, only AMD has good solutions. If you are looking at video decode only, you will certainly be fine with the 2600 XT. But if you plan to do gaming too on your big screen, then the Sapphire HD 3870 will be the right choice to run everything you can throw at it.