Jamie,
When to upgrade or replace?
It all depends on the reliability of your current system and whether you think technology is overtaking you, versus your own needs.
Also consider a new system that will be compatible with your current (treasured) software.
In my case:
2002, Windows98, 80GB / 516MB RAM/ Tower/dialup - main purpose at that time - family tree research.
2004, Service inc a fan replaced, upgrade to 160GB board, XP and Broadband.
2007, Now finding my computer too slow despite the usual housekeeping.
By 2008 with more and more online video (TV,Youtube viewing and creating) and music I needed something bigger and faster (no jokes please).
So early 2009 my computer guy constructed this wonderful compact Cube of 500GB / 4GB RAM. I'm still with XP (for reason above).
From experience my advice would be to get yourself a local computer expert to customise a system to your needs and smoothly transfer data.
Baz