If you were to return the 8700k and go for a 9th gen CPU, then I'd definitely return the motherboard as well and just go Z390.
However, since you already have the Z370 motherboard and 8700k, you might as well keep them IMO. The 8700k is still a great CPU.
The i9-9900k is ridiculously expensive, so out of your budget I'd think if you were going with an 8700k initially. The i7-9700k loses hyperthreading for some reason, it's an 8 core SKU with 8 threads. So, the 8700k with 6 cores, but 12 threads will perform better in multi-threaded workloads than the 9700k.
The 9700k will perform better in games than the 8700k because 8 threads is fine for games and the 9700k will run at a higher clock speed than the 8700k, but I doubt you'd really notice much difference in the vast majority of games. Biggest selling point for 9th gen IMO is the soldered TIM on unlocked SKU's for better temperatures, but a Celsius S36 will be more than adequate to cool an 8700k anyway.
Enitrely up to you if it's worth the effort though, and if you do really want to just go 9th gen, there are benefits. You're looking at $600 for a 9700k+Z390 motherboard though.