Ok, for pure gaming, you just want an i5 processor. That will provide the best performance possible without wasting money. If you do video encoding (for gamers, this is only for those that produce a stream) than the i7 will provide some extra performance. (i7 is just an i5 with hyperthreading, which does not help game performance.)
Your monitor situation is somewhat unique. Your resolution is only 1920x1080, so a single 680 is already massive overkill for most games and will handle any game well. But because 32" is pretty darn big for that resolution in terms of computer use, you'll probably want to use a medium to high amount of AA. This means sticking with Nvidia is a good choice, as it handles AA better than AMD. It also means you can't really spend more for more performance beyond a 680 - you only have so many pixels to push.
Recommended parts (selected from scan.co.uk since I don't know the UK market that well, you can compare prices at other retailers like Amazon UK, other UK retailers, or importing from a site like hardwareversand.de at your leisure):
GPU: 680. 444 pounds. The PNY 680 is a tad cheaper, but EVGA has the best warranties and tech support in the business. If you want to pay more for a custom cooler (not a big deal) you can get an MSI twin frozr version.
CPU: i5-2500k or i5-3570K. 161 pounds. The 3570K is the new line of processors which update the old i5s. They are a tad (~5%) better and will be near the same price so probably worth waiting for (should be available in a matter of days).
i7-2600K or i7-3770K only if you plan to stream or are a 3d artist. A non-K processor may be a tad cheaper if you don't intend to overclock. I don't recommend them, however, as you may as well keep the option of more performance open.
Mobo: MSI z77 g43. 77 pounds.
If you want to pay 20 pounds more for the option to add a second video card in the future (not recommended unless you also spend a considerable amount on a higher monitor resolution/multi monitor gaming):
RAM: 2x4gb 1600 mhz: 40 pounds.
CPU Cooler (if you intend to overclock): Hr-02 Macho. 40 pounds.
This is a high-quality, quiet CPU cooler that's relatively cheap in europe. The easy choice.
All prices rounded up to nearest pound & include VAT. Not sure on shipping. Total (including the HR-02 Macho): 762 pounds.
This is considerably less than your 1200 pound max budget, but to be honest you can't get better for gaming without spending more on monitors. The CPU & GPU above will be overkill for pretty much every game at 1920x1080 resolution. Other people will recommend more expensive motherboards, water coolers, or the like, but they're useless for gaming, only for pushing overclocks super high for fun. If you want to spend more than the above for gaming or casual use purposes, you're going to have to look at multi-monitor gaming or 2560x1440 and higher resolution monitors.Edited by MisterFred - 4/25/12 at 1:10pm