I had the Radeon 8500 for about a month through the Dell deal, but I stuck with my GF3 Ti200 for a few reasons. The 8500 was definitely the better card at the time, but the drivers were giving me some problems and I was more into my FPS gaming mode. I got the Ti200 in the BB Black Friday deal for $99, so I couldn't justify keeping the Radeon for 2x as much when the Ti200 was well-suited for what I was playing. I wasn't using any of the 8500's superior AA or Ani settings, and I wasn't using my comp as a HT system yet either.
It really depends on what you are using the card for. If you want better 2D and DVD playback, stick with the 8500 and wait a month or so for the 9700 standard or 9500pro (not convinced this will be faster than the gf4 lines, but won't know til its final). Since the 9700's MSRP is gonna be $300 and the 9500pro's MSRP is gonna be $200, I'm thinking they can be had for a bit over and a bit below your budget of $200, respectively. The GF4's close the gap in many of the areas that the 8500 excelled, but I still think the 8500's IQ is a bit better.
The Ti4200 Turbo is an excellent card, and IMO is the way to go in the GF4 line unless you can get a Ti4600 for around $200. Asus also has an excellent "Turbo" card that is pricier but has better features and software bundled. The only reason I would go with a Ti4600 other than that is if you want a dual-DVI display, and IIRC only the Leadtek has that option. I guess the question is, what areas do you think your 8500 is lacking? I ran every game I played very well with my Ti200, but my Ti4200 did make a noticeable difference. You would have increased performance in games with a Ti4200 Turbo @ Ti4600 speeds, but depending on what you play it may not be worth the upgrade.
Unless you feel the need to upgrade today, I would wait, especially with the holidays upcoming and a few new products on the horizon. Some B&M's have already started clearancing their GF4 cards, and ATI will probably be reducing prices some once the 9500 line is introduced.
Chiz