I don't think anyone can say that the x850xt is better than the 7600gt for everyone or vice versa. It depends on which games you are playing, how long it will be before you upgrade, what kind of deal you get on each, etc. Personally, I picked up the x850xt when it was $160 shipped AR, and I am very pleased with my purchase. I upgraded from a 6600GT and obviously notice a huge performance increase. I play Quake 4 at 1600x1200 with full AA, and it only slows down for a split second every couple of hours or so. I don't play any of the really graphics-intensive games right now, so it's definitely sufficient for me. I would have gotten a 7900GT, but I don't really need it, and that would have eaten into my 2405FPW fund.
There's not enough info out there to say that the 7600GT is a better deal at $15 more than what I paid. Also, I'll upgrade this card in less than a year, so I'm not concerned with how much games utilize SM3 in the future. I also had the VF700cu from my 6600GT to slap on the x850xt, so excess heat and the noisy fan are not issues for me.
So, I would say that the 7600GT would be a better choice if you can get it at the same price, don't have an aftermarket cooler, and need it to last for more than a year. I would say that the x850xt is the better choice if you can handle the heat and do not need it to be future-proof. But, then again that's just my opinion. I can't do a side-by-side comparison of the two cards, so I have to go off of what I've read in forums, reviews, etc.