This is a question I am asked a lot and this is a pretty good article by IGN that goes into it:

“Becoming a PC gamer has always been an investment. You’re not just throwing down a few hundred on a console that’s potentially destined to sit under the television accumulating dust as soon as the cycle turns, and something new can always come along and replace it. There aren’t generations of PCs, where each one is a clear iteration and improvement on the last, giving you all the information you could ever need on when to upgrade, and how. Instead, you have to educate yourself, weigh up the pros and cons of this component over that component, and figure out whether you want to risk overclocking your CPU and squeezing every drop of power out of it or just leave things as they are, knowing that you’re not unlocking the full potential of what you’ve purchased.“…..rest of article here