What is a good graphics card to run SC2 @ 1080P resolution and smooth gameplay at "at least" medium settings?
W/o AA? Anything modern w/ 1GB--I'm often using 700MB+ VRAM. I would think a HD 5750, or GTS 250, would be a minimum, just to make it worthwhile as a proper replacement for a 8800 GT. If you have a significant budget, and want something you can sit on for awhile, like your 8800 GT, go ahead and get a GTX 460. All that said, if you left texture detail at low or medium, your 8800 GT might even be fine.
Also please recommend CPU/RAM requirements for SC2...
For ultra? An i5 or i7 quad. For medium? Your C2Q is fine. Most of those old C2Qs could get 3GHz or near it without even bumping up Vcore, too. Like AMD with their Phenom IIs, making them go fast was easy--keeping them all under TDP was the hard part. If your RAM is 667 or faster, at least give it a try. It's fine as it is, but it's bound to have a few hundred more MHz in it,
without overvolting, and SC2 could use that.
I've got a C2D@3.2, 8GB DDR2 800, and GTX 460 1GB. I play at 1680x1050, at medium, high texture, and low post-processing (default for that is off), and have 4xAA forced. Usually, it stays pegged at 60, but can get down into the low/mid 30s on eye candy maps, with carriers coming my way. It's a smooth 30+FPS, when it comes to that, though--no slide shows to be found. GPU utilization is rarely above 50%, too.
I run SC2 at 1080p on "high" settings on an HD 5670 (with i3 530 and 4GB DDR3). Ultra is just the slightest bit choppy. Any of the 57xx or GTX 4xx cards will give you Ultra without breaking a sweat.
My GTX 460 can't give me good worst-case performance on high, even w/o AA. My GPU utilization is also
lower on high than medium, where my CPUs stay pretty much maxed on either setting. It's your i3 that deserves the credit.