I don't think it's necessarily true that you sing better without an instrument. For any given song I know, I sing it better while playing the guitar part, and I play the guitar part better while singing the voice part. I don't see them as separate parts, in fact - it's a single way of performing a song, and while it may be separable, either part alone is incomplete.

Personally, I go for an accompaniment that feels right and is interesting enough to play. Learning a new song is much like meeting a new person. You may or may not get along, and you sometimes know right away, but a lot of the time you don't know until you've been around each other for a while. If the song doesn't feel right, I shelve it until it does, if it ever does. I play it from the start the way I'm planning on playing it in front of people, so I begin with a basic vocal rendition and guitar accompaniment and then add or subtract whatever needs addition or subtraction. This can continue for years - there are a number of songs I play completely differently now compared to a couple of years ago.

My definition of excess must differ from yours, Don, probably because I grew up in the 80s. Let me give you two examples of what I see as excess/gratuitous pyrotechnics:

Michael Angelo, "Speed Kills" - Video
Yngwie Malmsteen, "Dream On (Aerosmith song)" - Video

Really, it's possible to be excessively mechanical and overwhelm the song with the arrangement, but I've never heard Martin Carthy, Richard Thompson, John Renbourn, Bert Jansch, or any of the other usual suspects do that.