ATi drivers are fine, and have been fine for a while. Generally it seems to be the people who don't own a Radeon 8500 who have problems with Radeon 8500 drivers.
I'd recommend the Radeon 8500 as well; if you can afford a bit more, the Retail 64mb ATi Radeon 8500 is selling for $154usd at Newegg.com. Just note the clock speeds of the various versions; Newegg also sells a 230mhz clocked Radeon 8500LE for $125, and there are also 250mhz clocked cards.
With the ATi boxed retail 8500, included in the bundle will be the DVI dongle, an S-video to composite adapter, a S-video cable, a composite cable, installation CD with ATi's DVD player, and TruFormed Halflife: Counterstrike, so I think all those are worth the extra cost to get a full-speed, 275mhz clocked version.