Well, I haven't been active in CS for a darn long time as I was quite tied up with work. As a photographer I find this questions hard to answer initially but I have made up my mind now after all these years. Like some of you here I am faced with similar dilemma.
We all shoot different things. Some do sports, some reportage, some family snapshots, some still life, nature, documentaries, and in my case architectural, commercial, lifestyle, and corporate. I started photography in the film era, though only shooting for hobby and mainly street and documentaries at that time. I am easily satisfied with a Nikon FM2n and some prime lenses, usually a 20mm, 35mm, 50mm, and 105mm. I don't mind my camera not having complicated electronics, well not until the start of the digital revolution.
With computer aided technologies, I have discovered that lens developments just gets better and better. The so called "cheapo" lenses is today capable of delivering image quality either similar to or much better than those made 20 years ago. Zoom lenses with ED, UD, or SD glasses are hitting and flooding the market even in lower grade models. I would say that if lower end lenses fail to produce better quality than a high end one, it is usually only noticeable at the extreme ends of the aperture settings. When stopped down to f/8 or f/11, one would be having a hard time guessing which lens was used for that picture assuming shooting conditions are the same.
Of course, with more expensive or pro lenses we have the issue of better Bokeh, better shadow rendition, lesser distortion, better toughness, and better sharpness capability at maximum aperture settings, but for most users these issues are not that noticeable. That is of course without doubt as the saying goes, "you get what you paid for."
With digital being in the frontline nowadays the ball game have changed. As a full time professional I am still shooting with an amatuerish Nikon D100 and I am upgrading to the D2X which I am pissed that until now there is still non in stock. Not meant to belittle the D100, it is a darn good camera (if you know what you are doing) except that it can be a little slow to work with, and with a lowest ISO of 200 sometimes a nuisance. I have shot with Canon 10D for some of my work too but I just hate the slow start-up time. I heard the 20D is almost instantaneous but have yet to try.
Why did I say the D100 is slow? Well, I shoot a lot of Board of Director and people shots and I usually do them in NEF (or RAW to other brands) and have my camera teethered to a laptop so the art director could view the pictures before we decide if we can conclude the shoot. I don't mind if the camera takes a long time to transfer the image to laptop but what bothers me is when shooting NEF files the D100 buffer only allows a maximum of 4 shots, too little when shooting people, especially when they are smiling away and you can't shoot until the buffer clears. The D70 or D70s is not any better although it has a higher transfer speed thanks to the USB 2.0 cable but still slow IMHO. It is frustrating not only for me but the people I shoot.
The other issue that bothers me is the exposure lattitude. I guess everyone knows that due to the nature of the CCD or cMOS design digital is very proned to washed-out or white-out highlight renditions if you are not careful. A higher end or pro camera usually has a higher exposure lattitude than a lower end one. Although I do plenty of controls on my lighting setup prior to a shoot to balance the light source, there are times when I am shooting outdoors that there is not much that I could have done to control it. A higher end camera would allow better shadow and highlight rendition than a low end camera IMHO.
Then we have the file size and resolution issue. Although 6 megapixel is not a lot of difference as compared to a 12.4 megapixel D2X but there are still differences. For some of you who argued that you compose the picture properly in camera and there is no need for cropping I would say good for you, but welcome to the real world of professional photography. In more cases than I can recall, art directors and creative directors always asked for more background space so they can crop to their own liking during post productions to fit the required picture space allocated to them. They might want only a square format out of the vertical picture, or they might even change their mind later and do a long panoramic crop. If you had composed your picture tightly in camera then I can say good luck to you.
So after all my long mumbo jumbo I conclude that I would rather have a high-end camera than a high-end lens (although I already have high-end lenses) because in the real world of photographic industry many art and creative directors are not really afficionadoes of the sharpest pictures. It is the way you compose and light a picture and also a picture they can work with that counts.