Nobody is wrong or right IMO.
I've built loads of computers from shuttle's too gaming rigs and I personally go for a modular PSU because they look better :D
Airflow isn't a big factor in a decent case with the PSU on the bottom unless as somebody said you are running triple SLI set-ups etc.
So...
Good luck its like a jigsaw puzzle most things only fit one way so can't go wrong really :)
Just watch your static charge when handling the components.
You can pick up a radeon HD 4890 for around £120 and its doing a great job for me(runs 2x 24" HD monitors). I built my I7 920 / 6Gb desktop for around your budget so shop around, ebuyer is a great site to use.
Get yourself on Ebay bought some new battery's for my 400D and 300D £8 for 2 and they are brilliant :D
Love the last shot, Wouldn't fancy walking up there though looks a bit steep ;)
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