The Q6600 is a great processor. Emulation and modern games work great, as long as your video card is OK.
2 of the cores might not be used in most cases, but this is changing in recent games. This proc is as fast as an E8400 or E8600 in tasks locked to two cores, and bests these CPUs in many modern apps. While a Sandy Bridge i3 2100 can definitely go faster, it doesn't really make sense to toss this proc to the curb just yet.
Emulation hardly takes any processor power, relative to something like Battlefield Bad Company 2 or Crysis (or anything else, really). Any 3D game is really limited by graphics card in this price range. I'm still running my 6600 to game, no problems here.
Don't spend more than 300 on ALL components for the PC you'll build around this processor, as a new barebones quad core from either Tiger or NewEgg, of comparable speed (AMD Athlon 620 and up) is 300 bucks even (usually 4gb ram, 500-1TB storage, etc).
RAM on this proc is DDR2 667 (PC2 5300). Plan on $15 / GB.
You need a 400W or better PSU, I use 550. Get the case with the power supply, NewEgg has a case/ 585w power combo for 60.
$30 for Ram, $60-70 mobo, $60 for power & case, $50 for HDD = $200, or $220 with optical drive.
Sounds workable, and should be a pretty darned capable machine. For $350 (added video card), this becomes a phenomenal gaming machine which won't have any problem running any game.