Disclaimer: This is only my opinion, based on my perception of the current market, and I could be completely wrong. Nobody can predict such things anyway.
I don't expect a large price drop for GeForce 7 cards yet (ie: nothing beyond the regular price behavior of electronics). The 8800 has barely a month of age, and nVidia hasn't released low- and mid-range 8 series card, and won't probably do until after christmas. So it's gonna be a while (3-4 months) before they start migrating their market towards the 8 series. In other words, the 7 series still has some juice left (hence the prices won't drop too much).
As for the difference between the cards, it's substantial. A 7900GS has a 20% to 30% performance gain over a 7600GT, and a 7900GT has a 5%-15% advantage over a 7900GS. If you're looking for cheap and powerful, consider a 7900GS. It's very overclockable from what I hear, too.
For instance, in this review
they compared a XFX 7900GS to a BFG 7900GT and a BFG 7600GT. Here are sample 3dmark06 results (these are for fill rate, but the general results of their benchmarks are similar):