OCZ makes a wonderful PSU. 700 Watt should be more than sufficient. You'd want to have more than enough power to operate PCU/GPU etc than run on inefficient power... better to exceed than make too close a call, besides, a bigger PSU will allow for more GPU upgrades down the road that may need beefer power. I think you could have gotten away with 450-600 Watt PSU depending on rating and model for the 8800GT as it isn't the beefer GTX GPU of the 8800 series card, but like I said, better safe than sorry. Whether it fits in your case is another question. Doesn't mean you can't do some tweaking. When I mod'd out a Gateway for graphic card update I had to drill new mount holes for the PSU to fasten to the case. If you have a standard PSU in system now likely you will not have problems. If you have one of the manufactures ******** non-standard form PSUs you may have to mod your case. Recommended that you do that delicately if drilling as not to get any metal slivers on board. Careful and precise, measure, drill, cover where necessary.
Dell reps, manufacturer reps, their typically idiots. They are at best people to consult with to verify a few things, but I had to correct my Gateway rep when I was checking compatibility for my upgrade/mod. Besides, they want you to send it back to them for the parts and upgrade or to just buy another new one anyway, so they are less likely to critically think about your situation.
8800GT is a reputable card. Let us know how all goes. Good luck.
After you do this, and you're ready for a new PC, consider researching and spec to build out yourself. It would be your next step towards having complete control over your PC and it can save you money, teach you a lot, and is in fact a lot of fun. If you'd find yourself to be nervous, barebone kits do the basic work for you in matching components. In reality, it will always be better to build your own system when it comes to Desktops.
Best of Luck