$500 cards will be able to play games on higher settings without sacrificing framerate, that is what seperates them from $200 cards.
If you want to get really technical, core speed, memory speed, pipelines and overall architechture are what seperate the cards. Games and other high demanding graphics applications will always require the fastest (and generally the most expensive) cards availible for the best performance at the highest settings.
Intel C2D E6320 / AMD Athlon X2 3800+
Gigabyte 965P DS3 / DFI nF4 Ultra-D
2GB OCZ Gold PC2-6400 / 2GB OCZ Gold PC4000
eVGA 8800GTS 320MB / eVGA 6800GS 256MB
150GB Raptor / 74GB Raptor
2x500GB / 320GB
OCZ GameXStreme 850w / OCZ StealthXStream 600w