Perhaps this is a bit anticlimactic, but the Core i7 860 performs exactly where you'd expect it to. It's faster than a Core i5 750, faster than a Core i7 920 and slower than a Core i7 870. As I noted in The Lynnfield Follow Up, overclocking is much easier on Bloomfield (LGA-1366) thanks to the absence of an on-die PCIe controller. It's not impossible on Lynnfield, it's just effortless on Bloomfield.
My recommendations from the initial Lynnfield review still stand, you'll want to opt for Bloomfield processor if you care about:
1) High-end multi-GPU performance (or other uses of high bandwidth PCIe)
2) Stock Voltage Overclocking
3) Future support for 6-core Gulftown CPUs
In terms of cost effectiveness however - the Core i7 860 is the way to go. With cheaper motherboards and higher operating frequencies than a Core i7 920, for the majority of users the 860 will be the better pick. Here's where the discussion gets interesting however.
A year ago, $284 for a Core i7 920 didn't seem like a lot for what you were getting. But with AMD shipping $99 quad core CPUs, and the Phenom II line being very competitive in the $130 - $200 space - is Lynnfield too expensive?
Our sources are telling us that Lynnfield isn't selling as well as expected, it's not a flop, but definitely selling under expectations. The reason? Price. Apparently the vendors (and their customers) were hoping for a sub-$200 Core i5 750. Remember that the majority of quad-core sales happen under the $200 mark. Fortunately for AMD, there aren't any cheaper quad-core Lynnfields on the roadmaps for Intel through Q3 of next year; the Core i5 750 will be the cheapest quad-core Nehalem for the foreseeable future.
Instead, Intel will compete with 32nm Clarkdale CPUs in the sub-$200 space. These are dual core parts with Hyper Threading; it remains to be seen how well they'll stack up to AMD's quad-core CPUs in that space, since it doesn't look like we'll see Lynnfield down there anytime soon.
Assuming that Clarkdale isn't overly competitive, Phenom II could dominate the ~$150 quad-core price point throughout much of 2010. The biggest threat to Phenom II appears to be the Core i5 650. We'll see how that plays out early next year.