No.
AMD's CPUs are doing very well, performance wise, right now, in every respect except for one single thing, code that is heavily utilizing SIMD backend performance. Core2 is simply wider there.
But this is not a trivial thing since every benchmark this forum's population reads measures performance almost exclusively that way. (the fact that AMD does well in server benchmarks is often attribute to that AMD 'scales better', however the fact that also different types of benchmarks are used is usually not taken notice of.)
Also, big, time consuming CPU work loads for typical desktop applications today is, can and should be vectorized for SIMD execution. So Intel have their performance priorities exactly right, even outside their benchmark one-upmanship. But what seems like a widespread belief that Core2 is 'generally' faster than Phenom or X2 is simply wrong.
AMD's performance on vectorized code (per clock, per core) is not set to increase in the close future. AMD's ability to compete will only come from offering more cores or more clock per dollar. The ability of that 'competitiveness' to show through in benchmarks is pretty slim though. Particularly for an audience that believes in over clocking.
So, Deneb's backend vector resources won't get better than Phenom. Meanwhile i7 will neutralize or even considerably exceed any advantage AMD has today in i/o. So no, AMD definitely don't have any answer to i7 aka Nehalem. Deneb will be a nice CPU though, cool and capable, but it won't compete with Intel at the highend. On the contrary. The Intel advantage, that today is partially just perceived, will become thoroughly real and genuine throughout the spectrum of applications.
AMD is slated to achieve much greater vector performance eventually. However I have doubts about that AMD will survive as a major x86 manufacturer for long enough to roll that out the doors. And Intel is along all the way with their Larrabee so times will remain hard whatever.
Intel is simply so much bigger with much greater resources. Only way AMD could have remained as a competitor to Intel was to achieve +30% market share. Since that failed due to circumstances that maybe will be regulated in court, AMD is simply screwed. I don't see any way around that. That of course also means that we as consumers are also screwed, but I doubt many are really going to ever realize that to it's full extent. Instead we are going to see a lot of reasoning along the lines that Moore's law is at end, market has no need of more CPU power, is demanding other features, etc. And a lot of you are going to buy it.