If you could wait a few months (i.e. 1-2), i would recommend it. Both Intel and AMD are set to release new processors and socket formats in June. AMD is set for June 1st, which is only a week away. Even if you don't bother getting the newest and greatest, the releases will drive the prices down on everything else. You can either save more money or get more power for the same amount of dough.
As everyone else said, don't skimp on the power supply. Also, not sure if the board you are buying has built in firewire, but it probably doesn;t. Not sure what you need it for, but add on cards aren't typically too expensive. Some sound cards come with firwire too, so may want to look into that.
I'm not sure what your friend was doing, but it is not easy to fry a chip overclocking, especially intels. I remember when the P4 first came out, i saw a video showcasing it's performance/temperture throttling. Basically when the processor starts to get too hot, it starts to slow itself down so it doesn't fry. It was actually able to run without the heatsink on it, albeit very slowly. The T-bird they tested with it, just kept getting hotter, going over 400 degrees farenheit (if i remember correctly). That said, if you are careful, and gradually increase speeds while maintaining cooling, then you should have no problems. I've overclocked every system I've owned and destroyed none. The key is restraint, don't just go for that monster overclock right away just cause Joe Schmoe said his chip hit that, and make sure you keep an eye on cooling.
Good luck, and have fun