Take into account a 4-year old system:
a64 x 3200+, 2x512 ddr (400)
250gb maxtor (pre seagate), visiontek (ati) 9600@256mb...
but: here's the kicker: socket 754 and agp bus loaded..
Not a good upgrade path here.. So in this area I think it's better to hunker down with low-end system performance and the new system AM3, socket 940, or whatever intel has up their socket sleeve to come out.
Then I shall be wow'd by system performance jumps with an x6400 amd or quad 6800 native (do I get to do an Indian dance, woo, woo, woo, woo?)
The upgrade paths laid out on a 2-year old sytem are more clear cut (socket 939 and 775 are gold vs 754 copper).
I already invested in a 400gb external usb drive to offload my "surplus" data. When you do a system rebuild, especially the $350 upgrade, it should go without saying that you should wipe your hard drive and reinstall windows.. your applications and benchmarks will thank you for this.. imagine what junk you've acquired in the system registry, orphaned install files and whatnot.
I have faith that processor prices will come down, memory and hard drive prices are good, but I'm still concerned with the "bang for the buck" when it comes to VIDEO CARDS.. the two main companies ATI (amd puppet) and GeForce (independent for the time being) are just not "getting it" when it comes to aggressive price cuts... This more than anything is keeping me out of the upgrade "market" as it were.. the other half of the equation is/was system bus/socket upgrade paths were changing like toilet paper, this is not good for the up-grader. My money does not grow on trees the way the gasoline stations think, thus I intend to stick it out almost possibly until some hardware dies, or technology/price redux gets further in-line with the "need for speed" ability to run mainstream software (2008, and beyond).
Part of the "allure" of next generation systems are:
1. Increased multi-tasking abilities (vista, speed-boost, & hybrid hard drives) Made for multi-core high (2gb+system memory, etc)
2. Smart multi-core computing can save power when not in use...
3. Time savings (when doing tasks such as encoding/ loading applications, etc.
4. Software that takes advantage of the new hardware, little do we know it, but applications are being written to be memory hogs because the people who write the software EXPECT you to have the latest and greatest... so, the handwriting is on the wall, upgrade or your system will C.R.A.W.L.