An older article on ATI's physics approach
http://www.pcper.com/article.php?aid=226 It indicates that the X1900XT has more than 30 times the floating point processing power as a fast CPU. And, that power is accessable. So, only a small percentage of the GPU may suffice to give a tangible improvement in physics.
They also have a chart that compares X1800 and X1900 to G7800 and G7900 regarding physics processing. From another source, the G7900 will be limited to visual effects and will require SLI to work. The ATI solution allows all types of physics -- e.g. flight physics -- and can work with a single card doing both GPU and PPU work.
Lastly, they indicate a person with a Crossfire MB will be able to use, say, an X2900 (released in several months) and X1900 together -- the X2900 as a GPU and one's old X1900 as a PPU -- in other words, hardware-physics processing will be free (in a sense) for current X1800 and X1900 owners.
Though the article is old, newer snippits have indicated the same direction for ATI -- e.g. the topic post THG demos.
We'll see. Competition is good