Developer machine - do you really need a core i7 and 6 GB RAM ?

After a depressing post about Christmas I will try to finish the year on a happy note.
Due to the fact that I want to avoid adding to my already mounting debt (car especially) I gave up buying a new machine. Instead I kept upgrading it to make it faster.
My current machine now is a :
CPU : Amd Sempron 2500+ - 1.4 Ghz (o.c. to 1.626 Ghz)
Motherboard : Biostar K8M800-M7A
RAM : initially 512 Mb PQI - upgraded to 2GB king MAX DDR1 400
Cooler : Amd Stock - replaced with a Zalman 7500 AlCu Led.
HDD : 1 40 GB Seagate + 160 GB WD ATA
PSU : no name initially replaced by a Rasurbo Silent Power 550W

As you may realize this is was a low-end machine even in late 2005 when it was bought.

My machine felt really slow when working with Eclipse , Glassfish and cruisecontrol + svn on Ubuntu Linux 9.04. That was last year about the same time as now (December 2008).
All I wanted then was to buy a new computer on which to develop Java. But I am not Jeff Atwood at least not yet so borrowing 1500$ in this country and in this economy to fund your computer needs is not a good idea.
Well at my new job I got a new generation E2180 Intel Core2Duo computer which was supposed to be lightning fast(for beginning of 2008 anyway). Guess what .. it wasn't . The computer kept reading data from the HDD like crazy. This made me understand that it needed more RAM and required it ...
So if a 1 year old computer can be choked by software development requirement what can you ask from your old 4 years old computer ? While studying hardware used by other people on the internet for software development I found this post by Jeff which really made me think because I just happen to have a processor in the same family(with stripped down cache Celeron style).
So I started identifying bottlenecks and issues on my old Sempron
1) It would not always start
2) It was noisy
3)It was slow and kept reading from HDD
4)Compile times were too long.

Fix for 1 - bought a new PSU (and a silent one to fix 2) - 40$
Fix for 2 - bought a new CPU cooler (also a huge and silent one) - 35 $
Fix for 3 and 4 - bought 2GB of RAM and donated the old RAM to my dad - 75$
Total amount spent 150$ which was spent over 2 months period.

Finally after replacing the parts the computer is fast enough for development (not gaming ) and more important quiet. I can still hold on to it for 6 months and then keep it as a Linux server. Considering a new computer (case , mb,processor, RAM , psu, hdd) could easily cost 1100$ (my local market calculations with a core i7 920 2 GB RAM which would need to be upgraded soon enough to a i7 970 6GB RAM) I think the upgrade was a good idea and I will easily shave the 150$ off the CPU price next year (Intel processors are overpriced in my opinion but are worth it for a non-gaming machine).
Also as the cooler was very big and quiet I thought that I could afford a minor overclock from 1400 Mhz to 1626 Mhz and the system runs fine at this frequency(that was brave considering the fact that I was scared I would burn the CPU when installing it and the heatsink + thermal grease-did not happen).

Glassfish / MySQL and Eclipse run without interruptions and I can even open a PDF ,3 browsers and listen to music at the same time .. huge amounts of RAM can do this to you.
Considering the economy and the jobs in Bucharest it is always better to keep your money for bad days instead of expensive hardware. In Romania a good software developer can rarely get 1/3 rd of the American software developer paycheck .. and guess what costs are higher here .. but this does not mean you should not optimize your hardware .
I cannot understand people that are in this software development jobs and do not know (or care) what is underneath the case. I for one think that we need to know how to get the best of both our minds and our computers in order to deliver quality code.

PS : Because I did not study my computer info I kept thinking I had a socket A sempron until I opened the BIOS and found the information I needed. Before that I spent another 30$ on a Amd Athlon(Barton) 2600+ CPU which I will also give to my father.
I think that for his needs (office,music,movies) an AMD CPU will do (coupled with 1GB RAM).
LE : I did the upgrades on my father's computer now it works at 2600 + (Amd Barton socket A) a bit overclocked to 2700+ (2000 Mhz) and I really like how it works. I used his old processor an AMD 2000+ to power up one very old machine left around the house (carrying an old Duron 900 Mhz). Turns up that the thing I was scared of the most (installing a socket A processor and heatsink) was doable. I always thought I would burn down the damn thing but I didn't .. you just need to pay attention.