I go new every 18 months-2 years. I bought a step or two down from top of the line. For example, I built my last rig and went with a quad-core Intel chip but not the quad-core extreme. I went with a very nice video card but not the NVidia 260. I bought a lot of RAM but 800 MHz not 1033 MHz. I bought nice hard drives but not 15k RPM drives.
Between my job, second job, and other projects, I spend a fair amount of time on my computer. It needs to be responsive or else it's frustrating.
I've been tempted to really deck out a machine, but the power would be wasted for what I do so I usually talk myself out of it.