The obvious answer would be something from the Radeon HD 5000 series. Since you said you wanted something smaller, I would recommend the 5770. It has a superior level of performance to the original GTX260, and is not at all far behind the GTX260 SP216, it's not a very large card, it has very little power draw for its level of performance (like all cards in that series), and it'll only set you back $160.
Of course, before you do anything like buying a new GPU, I'd go with what pallas suggested and attempt an RMA.
I was thinking of getting one of the two below from newegg.com because of their significatly lower price which is more within my price range. Though my knowledge of video cards isn't that great. So I am unsure of what to buy that I can actually afford at this moment which will still do the trick.