A lot of people will point you to this site:
http://www.barefeats.com/harper8.html. This showed it to be slightly worse in some of the apps (performance wise) than the 2600. However, this was tested PRE 10.5.3 and since then drivers have been updated and performance improved considerably to the point where the 8800 is now at least on par with the 2600 (see
this thread. I don't know how this currently stands at 10.5.5 but maybe someone else can help out with that info.
Next take into consideration the future. Snow Leopard is thought to use OpenCL which will make use (potentially) of the GPU. If thats the case (this could change though) then the 8800 will almost certainly be better. In the future more applications may take advantage of this as well.
If its a case of RAM vs. GPU its up to you. RAM can be upgraded any time, the GPU cannot (or at least its v.v. difficult to do so).
If you search the forums this has been asked a few times before. I've just purchased an iMac (2.8 24") and I went with the 8800. I consider my usage to not be entirely video intensive but I'd rather be prepared than in a few years be wishing i'd upgraded. I don't plan on buying a new mac for a good few years so i'd rather be prepared for the future than be stuck at that time.
The 2600 (i've been led to believe through reading) is nearing the end of its life in terms of potential improvement, whereas the 8800 is much newer and greater improvement may be gained from this card rather than the 2600.
I hope that helps a little...