I used to upgrade my PC based on the following simple formula: when CPUs of twice the speed of my current processor drop below �100, it's time to move up.
Right now, though, I'm running on an AMD Duron 800Mhz from over two years ago, and Athlon XP 1600 processors are currently going for less than 50 quid. The main reason I haven't upgraded yet is that I now do most of my games playing on my PS2 rather than on my PC. (And one of the joys of a console is that you don't have to upgrade it to the latest hardware to run the latest games adequately.)
But I think I'm getting to the point where I'd like to upgrade my PC. The last game I played on it (Warcraft III) was noticeably sluggish when there were a lot of characters on screen, and when I'm running Virtual Machines, they aren't as snappy as I'd like them to be. And if I plan to be running a Linux VM sort-of permanently, I'd quite like it to be snappy.
Unfortunately, my current motherboard (an Abit KT7) won't take an Athlon XP. So I'll have to upgrade the mobo. Also, it looks like all of the Athlon XP mobos only take DDR RAM, so my 512MB of PC133 isn't going to be any use, either. My wireless LAN card sits in an adapter in the ISA slot on my current motherboard, but ISA slots seem to be extinct now, so I'll have to get a PCI adapter instead. At least my Radeon video card will still be okay in an AGP slot.
All in all, I think I can put together a nice little upgrade package (Athlon XP1600+, or maybe higher, plus motherboard, plus 512Mb DDR RAM, plus PCI adapter card) for about �250. Also, I can probably recoup some of that cost by selling the old parts on Ebay. (We've played the game of keeping spare PC parts around to build new computers from them...but we have all the computers we reasonably need already.)
I think this is going to be a project for the new year, though. I need some time to get myself back up to speed on motherboard technology. I'm not looking for top of the line hardware, but I'd like to make sure that I'm not going to be buying a lemon.