I just don't see the point of such a limited range (35-70) if you've already got the 50 prime. The distance from 50 to 70 can be negated with a few footsteps, and a zoom lens is at its weakest at the extremes.
Seriously, the OP was asking about portraiture, do you shoot portraits? Are any of your recommendations to the OP based on actual experience?
The zoom changes the perspective- which changes the look of the face, which is desirable in different ways for different faces. But in a studio you have limited space unless you have a very large studio, so a huge zoom range isn't useful at all- so you'll end up with all the optical compromises of a large zoom range and use none of the advantages. If you're that worried about budget, then I'm guessing that you're in a smaller space, so while portraits from a 400mm prime totally rock in terms of flattering zoom compression, the OP isn't likely to (a) want to hear about a lens that's 10x his budget, or (b) going to want to be 20+ feet away from his clients.
Also, the smaller the zoom range, the more likely you are to get consistent results at differing focal lengths, important if you're doing a range of portraits, or portraits for different members of a family that are going to hang next to one another on the same wall.
The point of recommending the 35-70 is even at its weakest (wide open, wide end,) it's much better than most lenses, which is why it's regarded by many people as one of Nikon's finest zooms ever. The new 24-70 is a better lens, but it's twice the OP's budget.
My studio is pretty small, one of my friends has an old elementary school as a studio- when I've shot in his studio I can use a lot more lens, though that takes me a lot further away from my model, making communication difficult.
Why not just add another prime (85 1.8?) to accomplish the same thing.
The 85mm is a very good portrait lens choice. However, if you're shooting adults and children and mixes of adults and children then I think the 35-70 is still a better overall choice (which is why it's my main studio lens.)
As for the third party lens comment, tell that to the Zeiss/Oly fiends.
Which Zeiss is that- the European Zeiss, or the licensed and made by someone else in Asia Zeiss? You do understand the difference between a Zeiss ZF (which is outside the OP's budget) and Nikkor and Sigma when we're talking about the OP's D80, don't you? It certainly has a lot more generic validity than recommending an 80-200 for portraiture.