I have a character in Living Greyhawk who definately has an item worth far more than 1/8 his wealth. A 15th level character bought a belt of magnificence +4. Oh dear, I sold nearly everything I had except armor and my shield to get it. 100,000gp for a +4 stat bump in all abilities, and only taking up a single body slot. The character has some amount of dependency on 5 of his 6 stats, Str (damage, attack, and various shield feat DCs), Dex (AC and Init), Con (hit points), Wis (bonus spells), Cha (smite and divine grace).
Yeah, that's an item worth more than 1/8 his wealth and I'm happy to pay it.
Hmm, I wonder if the 1/8 guideline actually means 1/8 excluding weapons and armor and shield...