I've always been a firm believer that when you're buying something that you intend to use a lot and/or keep for a significant period of time, buy the best that you can afford, rather than taking the cheap option. I think that ultimately, you get more out of the item itself, and you also can often save on replacements/repairs since cheap options don't have such a good lifespan.
To put this in context ... in the past 12 months I've bought a new bike (Kona Dew Deluxe) and a new camera (Nikon D80). In both cases there were cheaper options available, even staying in the same broad requirements (a cheaper hybrid bike, or a cheaper DSLR), but I decided to pay for the best gear I could afford.
One of the problems with this attitude though, is that with some purchases it's not the initial hardware that hurts. It's the "Razor and Blades" scenario, but this time it's a much larger scale.
Take, for example, the camera. When we got it, we paid a reasonable $1300 for the D80 with a 18-135mm lens included in a kit. But having a "real" camera, and starting to get more interested in photography, I'm now shopping around for accessories. First thing I hunted for was a 50mm f/1.8 lens. This was supplied by my partner as a birthday present, but the price tag was around $200 ... a significant percentage of the initial purchase price of the camera. If I'd been after the higher-spec f/1.4 version of the lens, that would've been closer to $500!
A short while back I started to look at tripods, remote shutter releases and a good quality bag to carry all this stuff in. While you can get tripods very, very cheap in various places, I've looked at some and there is no way I would trust 1.5kg+ of camera and lens on them ... In fact, I have a crappy tripod that I got from Zazz for about $25, and it's so poor that the head doesn't even sit level. On a flat, level floor, you need to adjust the legs to different heights so that the head of the tripod and the camera are level. No thanks. So now I've just spent $470 for a remote control ($50), bag $(120), tripod and head ($300). If you're interested in what gear I'm using, check out the Camera Gear page.
This is just the camera hardware! Then we go back to the computer, where after several weeks of research and agonising, I caved in and bought a 23 inch Apple Cinema Display. That one really hurt the bank balance, but once I dropped it on my desk and took out the crappy 19 inch Viewsonic monitor that it replaced, it felt like the right decision. But now I'm looking for software to take me out of iPhoto ... And I haven't even started on the bike gear!
So beware! Always buy the best you can afford, I stick to that. But make sure you know what buying the best entails, now and in the future!