Frankly, I'm sick of waiting and am wondering what I should do...will the hammer (athlon 64) be that much better than the current p4 3.06 or 2.8, and if so how much better. Same goes for the XP 2800.
If you are sick of waiting, then Hammer isn't the chip for you. Not only is it 6 months away, but most likely Hammer will have insignificant performance gains over the top Athlon chip or top P4 chip at the time. Plus you'll be paying quite a large price premium for that Hammer chip - sure that gets you extra features, but at this point in time virtually no home user will use them. I'd focus on the P4 or Athlon if I were you.
Then you need to make your choice as to exactly when you want to buy the computer - since timing depends on which chip to buy. Prices do drop regularly, and a few new chips are just on the horizon.
Price cuts happen the first month of every quarter (January, April, July, October). Usually the 2nd week I think
While that is generally true, they don't have a set schedule that they must follow. Quite frequently it is the 3rd week where we usually see the price cut. But there is an article over at the Inquirer saying the next Intel cut is mid February. I don't know how true it is, but it certainly doesn't point towards an early January cut. AMD will cut prices at about the same time. And quite often memory prices spike in December due to the extra demand around Christmas, so waiting until February will likely get you cheaper memory too (but this one isn't guaranteed).
So can you wait until mid to late February? If so, you'll see nice price cuts. But you'll also see hyperthreading expanded down the Intel line (which will give a nice boost to programs without paying the premium for the 3.06 GHz that is the only chip that currently has hyperthreading.) On the AMD side, Barton should be out about then, which will have a larger cache and that should give a nice boost to *some* programs. I personally would wait until then if I wanted a new computer.
But maybe you cannot wait that long (maybe you want a computer for Christmas). If so, there are some good deals out there. I'd probably get either the 2.4 GHz P4 (533 MHz fsb) or the Athlon 2400+ XP. Both cost about the same, can do quite well on today's programs, and leave a good and clear upgrade path for when prices on faster chips plunge. At that point, I don't see any benefit of either company (AMD or Intel) - just toss a coin, you'll be happy with either.