At the range of $700-$800, we're not talking about budget systems in the real world, and you are the one who first set the bar at "budget", and Dell's "budget" at that, so VivienM is perfectly right to point out that Dell's "budget" is not a $700-$800 system.
In any case, in the "normal" budget range, there is no way I can come remotely close to matching a pre-built Dell with a self-built system with identical specs (edit: see my $420 Dell example above; if you discount the fact that the $420 package also includes a 17" LCD and a XP license, then you're really looking at less than $200 for the P4 521, 512 MB RAM, 160 GB HDD, combo ODD, mobo, PSU, case, mouse, keyboard, and free shipping). Because these low-end systems are the bread and butter of their business in terms of quantity sold, the pricing is extremely competitive and the profit margins are razor-thin, which coupled with their volume discounts for parts, means that they can crush a self-assembled box in terms of value any day. For high-end systems, there is less quantity involved, and they can thus go for higher profit margins, which is why for enthuiast systems, it does indeed pay to build it yourself. Personally, I prefer self-built as well. But if it's a system for friends and relatives who neither game nor crunch things in MatLab, there's no way that a self-built system would be economical for them, and as such, I never recommend self-built systems for "regular" folks.