Welcome to the forum!
I invite you to look at the Premiere Pro BenchMark (PPBM5) web site and notice that even the fastest Sandy Bridge processors do indeed benefit from a CUDA card. It is not ether or, it is a great combination. The features that they probably were talking about are not supported in Premiere. And the smooth playback that you experienced will not happen without MPE hardware acceleration.
Thank you for your answer.
I had one more question when a cuda card supports the exporting part. As a test I added a luma curve to a 30 second dslr clip and copied that effect 10 times, with mpe off I only had audio but the image froze when attempting to playback the timeline. With mpe on I had fluent playback, but, when I wanted to export to to a h.264 1080p vbr 25-30mbs preset with mpe off it took allmost 5 minutes, with mpe on it toke 20 seconds.
is it so that mpe only uses the cuda card to support in exporting when there have been gpu accelerated effects applied on the clip? If iI don't apply any effects on the clip I don't get any speed advantages during render when mpe is on or off, only when gpu accelerated effects have been applied.
What you read about on the Sandy Bridge CPU's video-encoding capabilities is called QuickSync. QuickSync currently works only with the integrated Intel GPU inside the Sandy Bridge CPUs. Intel has a separate plugin that allows Adobe Premiere to use the feature. However, it does not help editing or playback within Premiere at all; it remains software-only in CS5.x. And while QuickSync does speed up encoding via the Adobe Media Encoder with Maximum Render Quality disabled, selecting MRQ to increase the quality on encodes would completely negate any speed advantage of QuickSync. Thus, you're better off going exclusively with a certified Nvidia CUDA card.
I am going to add to what I stated:
The Intel QuickSync plugin is currently not compatible at all with the PPBM5 benchmark test because the benchmark requires the export to MPEG-2 DVD and H.264 Blu-ray formats (neither of which the QuickSync plugin currently supports). The only available MPEG-2 and H.264 presets in the QuickSync plugin encode the video to a format that requires re-encoding (and thus degrades image quality further) when exported to DVD or Blu-ray.