I disagree, except one point. My last major upgrade, should all of the parts not have failed, was around $400. So was the one before it.
K6-2/Voodoo2 -> Duron 800/GF2 GTS -> 1800+/GF4 Ti 4200 -> new 1800+*/FX 5900XT
That point is that you are not considering a wrothy upgrade, but the best value for that upgrade. Value is actually increasing now until about $300 on CPUs and video cards. The entry level for even gaming has been coming down; the point of diminshing returns is what has not, which is making you think everything is more

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Look at s754 Sempron 64, and the Geforce 6200, and now 7300. These parts can actually play games! Not well, maybe, but they can get the job done.
But, but, 2x slower cores. It's not like we have dual 3000+ cores in each dual core
Um, you're wrong, plain and simple. You've effectively got 2 3200+ cores (2GHz) in each 3800+.
Where is all the money coming from?
Two places: nowhere, and people who paid that much then.
I'm on a 1800+, overclocked (1.92GHz) and undrclocked (1.15Ghz), depending on my mood (I can undervolt fans further underclocked). Until I can afford a dual-core upgrade with a PCI-E video card, or my PC completely blows up, I'm staying with it, because I can't see enough value in anything less than a dual-core. Building a dual-core A64 rig and being able to play with a bit only confirmed my feelings.
You see a lot of people getting these parts here, but note that enthusiasts will be more likely to buy new things, and every now and then, someone wants a dream machine. I made one a few years back. Now, the same guy wants an upgrade fairly cheap. Most people like to splurge every now and then. When they're not, they aren't as likely to be into asking about the best parts they can get

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* seems silly, at first, but this was when they were introducing the Barton, and a lot of the chips that would be higher-speed or mobiles were being sold as 1800+ to 2100+ speeds so the Barton would immediately have room, and I wanted more quiet (decent underclocking and undervolting) on the cheap.