According to tomshardware, the 8600GT is tied for the best deal for $100 PCI-E. The 8600GT/GTS isn't a gamers card because when it was released it was a god aweful deal (a personal note, when it was released I was expecting something like the 8800GT, the 8600 was a HUGE let down), now that its come down in price, its a "you get what you pay for". When the 8800GTX was released it was like...what.. $1000 or $800? droppeed to $600 in an ok ammt of time, but it was still, and still is, an expensive card. The 8800GT does that for $300, and its MSRP is $250, so gamers jumped on it. Gamers (hardcore esp) play at high resolutions. More pixels you have, the more realistic it looks.
By you saying "Other than having half the ram onboard" it shows your an every day person (not a bad thing, just the way it is, and your here to get educated). The ammt of video ram doesnt really matter (if thats the only thing your looking at). Would you rather have a 8800GTX w/ 128MB GDDR4 or a 8600 w/ 1GB GDDR2/3? Any 8400/8500/8600 w/ over 256MB of ram is just marketing. 13y.o. Mikey goes into Best buy and shows his mommy and daddy a 512MB card for $140, mommy and daddy probley think thats a good deal so they buy it for Mikey so he can play CS:S at the same resolution and same gfx detail that he used on his 9600pro 128MB (because he's too ignorant to bump up his settings) and everyone is happy. Im drunk and ranting. 8600 is a totally diff class then the 8800(anything).
Having DX10 compatibility makes your Vista desktop look nice, 8600 cant push a DX10 game. Yes it does decode HD video so the cpu (probley sempron or celeron) doesn't have to which makes it a good choice for a HTPC, esp passively cooled.