Let's start at the top. If you've been paying attention to processors, then you know that Nehalem is the best thing since sliced bread. Intel already had a bit of a performance lead of AMD with its Core 2 series, and the new Nehalem architecture takes that lead to new heights. Ironically, they do this by implementing some features that AMD has been using for years. The memory controller is integrated for the first time, and Nehalem adds a QuickPath Interconnect which operates similarly to AMD's Hypertransport.
The result of these new features is massive improvements in performance. The performance improvement Nehalem provides over the Core 2 Quads is larger than the performance increase any architecture in recent memory has provided in comparison to its predecessor. At least, that is, when you use it for tasks which capitalize on its strengths and make use of all four cores and eight threads. For example, when encoding a x264 HD video, the performance of the Core i7 965 Extreme Edition is an average of 40% faster than the performance you can squeeze from a Core 2 Extreme QX9770. In fact, the only setup that can outpace the Core i7-965 is a Skulltrail platform running two Core 2 Extreme QX9775s. This impressive increase applies to a variety of 3D rendering, video editing, and professional/scientific applications.
It does, not, however, apply to programs that do not make much use of multi-threading. Games are a great example. In Crysis the Core i7 965 provides less than ten more frames per second than a Core 2 E8600. Yes, the Core i7 965 is technically faster. But even in an article such as this one, its impossible not to comment on the fact that the Core i7 965 costs nearly a thousand dollars. Make no mistake - if you need the fastest performance you can get and money is no object, then the Core i7 965 is your best bet. The slower Nehalems are also worth a look, however, as they provide 90% of the performance at less than 50% of the price.