I was recently told that having a 3ghz processor means nada if the front side
bus isn't up to par: in other words, if a slower processor had a higher front
side bus (along with the motherboard and ram speed) it would outperform it.
Is that all there is to it ? FSB ?

I would appreciate a thorough and precise explanation on how this works
because the way I see it now, we are all just getting shafted into buying
faster CPUs only because of the FSB but nothing stops them from making a
slower (800mhz) cpu with a 200mhz quad channel FSB. Any thoughts ?
I'm asking because I will be building a new computer soon...

when dealing with a computer, you have data, you have instructions, and you have a CPU, which datas the data and preforms operations on it. The plan is to get the information to the CPU, do the math needed, and return the result. The best method would be for the CPU to have memory attached to it which would run as fast as the processor itself, so that as soon as the proc was done with a step, it could 9instantly be fed the next step.
However, such on-chip memory is very very expensive, so instead, we have Computers with a little on-chip memory (dedicated as cache for temporary storage of the most recently used data), and a big hunk of RAM. RAM is significantly slower than the CPU, but it's also alot cheaper than on-chip memory.

In order to get the data from RAM to the CPU, there is a FSB (front-side-bus) which moves all the data back and forth between the two parts. The speed of this bus is very important in the overall performance of the machine because if the really fast processor is waiting for new information all the time, then its speed is wasted.

The closer the FSB is to the processor speed, the more efficient the processor can be (ignoring other optimisations and computing tricks). However, "efficient" and "fast" are two different things.

When trying to get the fastest computer, the first thing to look at is the CPU speed. This is the limiting factor on many aspects of computationaly-intensive applications, like computer games. Then the FSB/RAM speed. Then the Graphics card speed( how many frames per second can be pumped out to the screen?) then the hard drive speed.
In certain cases, Such as games, the graphics card speed will have a bigger impact on pverall performance than FSB speed.

"performance" depends alot on what your goal is. fast UI responce? fast in-game frame rate? fast calculation of Calculus equations? Each goal will benifit more from different areas of the computer.
CPU-bound tasks, such as calculous functions and other number crunching of a high order will benifit from a fast processor. Little data is pumped from memory to the CPU - more often, the CPU gets one set of data, then performs lots of calculations on it. Faster CPU will make the difference here.
SIMD tasks, such as Photo-shop work, are often memory-speed bound tasks. They will send one instruction to the CPU, then pump tons of data over the FSB. The CPU the runs all the data through the one instruction. This will benifit from faster FSB/RAM.
Doom 3 will need a fair amount of CPU and memory bandwidth, but the graphics card is really going to be the difference here. If you have a 3 Ghz proc, but crappy video, you'll have a very fast game running at 3 fps, and it'll suck.
If you are processing Gigabytes worth of video data at once, for, say video editing, everything has a hand in the performance of the machine. A fast CPU to handle all the data, a fast FSB to move all the data, lots of fast RAM to store and send all the data to the CPU, and a fast Hard drive. The Hard Drive speed comes into play here because you are working with more data than can be stored in RAM at one time. Any time that you try and access data that is not currently loaded into RAM, the computer must save some of it's RAM information to the Hard Drive, and then read the information you asked for from the Hard Drive. A fast drive will make a *huge* difference in performance in this sort of situation.

My current machine is very slow. It is a dual 500Mhz machine with a 133Mhz FSB. The chips are fast enough for most of what I do (a little 3d, but mostly audio and Photoshop). the FSB, however, kills the performance that I could be seeing, esp. in SIMD (Single Instruction, Multiple Data) areas. I'm going to be upgrading this year; Photoshop CS dies on this machine.

IMO, an 800mhz machine with a quad 200mhz bus would be more than useable for most applications - text editing, browsing the web, etc. However, the processor would be far too slow to handle the outright computational tasks needed to deal wth all the pretty colors and gradients in WinXP, let alone the application you might want to run on it.
My mom uses Email and Mozilla, she has a 450mhz PII laptop, and it's fine for what she does. to me, it's deathly slow, and that's not due to the FSB speed

I hope this answered your question