I always look to the Tom's hardware chart
when comparing GPUs (or CPUs, but that's another chart). Their most recent choice for the best cards (tie between Nvidia and AMD) for ~$165 are the GTX 460 1GB and the Radeon 6850. The way the Tom's chart works is that you would need to get a card 3 'tiers' (or more) above your current card to really notice a difference in gaming performance. The cards I mentioned are only one tier above your GTX 260.
In short, there is no card at the price you are looking for that would be substantially better than the one you have now. The only advantage I see to one of the newer GPUs is DirectX 11 support, if you play games that actually use it. In my opinion, you are better off waiting until you save up some $, or wait for newer GPUs to come out that fit your budget and are also substantially faster than what you have now.
Hope this helps!
PS: If you are able, you can get much better deals on Newegg or Amazon than buying retail at Best Buy. They sometimes have good (special one-day or weekend) deals on cell phones in the store, but the price markup for items like video cards is awful. To put numbers on it, the GTX 460 1GB at Best Buy is $249.99. You can get it for $159.99 on Newegg. Your mileage may vary, but I doubt you'll be able to find a good deal on a video card at BB.