Believe me, all the cards I own are Nvidia products, but even I must admit that ATI is doing a great job right now. The 4850 is the way to go, especially with your P45 motherboard. Phyx means jack stuff right now. Few 'real' games use it, only tech demos mostly. ATI cards have this video encoder thing going for them and DX10.1.
If you are getting 4GB of memory then yes, get 64-bit Vista (not XP, driver support was horrible).