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I have the $$$ and my wife lets me buy new stuff.
The urge to upgrade audio components seems endemic to the condition of being an audiophile. Which of the following is usually your main reason for upgrading?
When the prospective "new" piece offers appreciably more in some respect than what it replaces. I've had a DD processor new in the box for nearly two years. I'm just not dissatified enough with the performance of my Fosgate Audionics Model 4 pre-pro, to put it in my system (even though it's just an add-on piece)! Maybe I'll sell it and wait for Pro Logic II.
Each year I review my system against what I read, then go to each of several stores in my area and listen; as I'm a long-term customer, it's visiting old friends. Sometimes a review will expand my review base. This year I replaced my phono cartridge (6 years old); next year, on general principles, my 17-year-old tonearm is up for replacement and my CD player is up for review. Some components stay in the system for extended periods, especially speakers.
If my system is having trouble making music, it's time for an upgrade. However, if I like the way a piece of equipment sounds, I will keep it until it falls apart and can't be fixed anymore. You never know when the mood will hit you and you MUST play an LP!
I upgrade when I can afford to upgrade. My system is always evolving. I constantly look at new gear to keep up with what I'll buy when I get the cash. I don't know about the rest of your readers, but I don't own the perfect audio system (yet), so I plan to keep upgrading for a long time to come. After all, it's part of this wonderful hobby/obsession we share.
When I sense that I am no longer enjoying the music as much as I recall having experienced it in the past, I begin to ponder which component might be upgraded to give me the biggest improvement per dollar of cost. I also consider how long I have had a component, thinking I can take advantage of technology that has improved since I bought it. For example, I have owned my Vandersteen 2C speakers since 1986my oldest component, and the one I would most like to upgrade. I have spent small sums over the years to add audio systems to more rooms, so that might be considered an upgrade strategy as well.
It's because I often have to choose between family necessities and racking up frivolous debt for toys pushed by the "audio pornography" business. I have yet to hear one piece of equipment within $1500 of what I own that would make me want to buy it, save for vain reasons.
As a hobbyist, every so often I get the itch and decide that I want something new. Nothing really wrong with what I have, mind you, just that sometimesonly sometimeschange is good. Most of the time it's just change and fun. Who knows? One of these days I may get a CD player for my audio rig.
I don't upgrade until I am forced to pay for a major repair or buy new. Except for new sound and video delivery systems, I usually wait until I can afford themusually second generation. I'm getting SACD as soon as the Sony SCD-XB940QS makes it to the USA!