How long should you keep the clunker? The short and simple answer is that one should keep everything as long as possible; the energy consumed in the manufacture of computers and the waste created in their disposal are major problems. However there are often other considerations and concerns that arise.
1) Dump your CRT Monitor. Here is the one part of the computer where technology has improved so much and prices have dropped so far that there is no reason to have a CRT monitor on your desk when you can have an LCD that takes up far less space and sips electricity. No more electron gun firing into your face either; the radiation level is a fraction of a CRT. They are not perfect; CRT's handled different resolutions better, but otherwise this is the one exception to the rule about hanging on as long as possible.
2) Intel giveth and Microsoft taketh away.
Funny, how every time Microsoft issues a new operating system, your computer no longer has the oomph to run it. Vista, the new operating system, barely runs on less than two gig of RAM, needs good video and a zippy processor. However one has a couple of options to avoid a change of computers:
Ignore it. A lot of people call Vista a flop that adds nothing to the computing experience over XP. I do not entirely agree; it is very pretty, the search feature is fast and effective, and I never got the blue screen of death once. However corporate IT types are sticking with XP for now, and even Microsoft had to throw in the towel and agree to keep selling XP in lower-powered machines until 2010, so you will get service and support for at least another four years.
Upgrade your computer.The biggest benefit of a desktop vs a laptop is the fact that they are upgradable. I always built my own boxes, so adding a bit of RAM or a new drive or card was not a challenge for me. Others are intimidated, but there are computer shops all over most towns with techies who can do it for you. It is no different from the "tube jockeys" of the 1950s- it isn't that hard, just swapping parts in and out. Some computer manufacturers make it tougher by using proprietary connectors; if your computer cannot be upgraded don't buy that brand again, teach them a lesson about open source design.
Dump Microsoft. With every release, Linux gets easier to install and use. I have played with Ubuntu and found it to be a snap to install and learn. It will run on just about any PC back to a PIII, and will do just about anything you are doing now. (almost- I have to keep a computer running windows to do my Quickbooks and a few other Windows programs.)
3) The Internet is your Computer
In fact, every week it matters less what computer you use and how fast it is; the internet is becoming our computer. Google and a few other companies offer almost complete office suites online; Photoshop just launched an online version of its formerly computer-hogging photo editing program; it is getting to the point that our computers are little more than internet terminals. The fastest-selling computer in the world right now is the cheap and underpowered Asus eee pc; with Windows and without the internet, it would be a toy. But when doing email, browsing or online banking, it is as effective as a far more powerful desktop. After using microsoft operating systems since MS-DOS, I switched to a Mac two weeks ago; because my work is primarily online, I didn't need to buy any software or go through any learning curve. Whether Steve Jobs or Bill Gates like it or not, we are all merging into an internet world.
So, in summary:
1) Clean up your existing computer, vacuum out the dust bunnies and clean the fans, defrag that drive and it can probably keep going for a couple of years more. 2) Take advantage of the growth of online alternatives. 3) The biggest advantage of the newer chips is their lower power consumption; turn your computer off when you are not using it. 4) If it does everything you want and you are happy, stick with it until it dies. (but make backups regularly! It is usually the hard drives that go first!) 5) Invest everything you are saving on the computer in the biggest LCD monitor you can afford. Studies have shown that a lot of screen real estate is the biggest boost to productivity of any change. And movies look really terrific.