This is a great thread. Lots of individuals, both lovers of the system and those who work in the field, making lots of interesting replies.
For my group, we overall have bought less. We tend to buy in spurts now. Wait for a few books to come out and then go and buy them as opposed to picking up lots of books. Part of the problem with this is that prices have gone up as the format has evolved to what players want. For example, one of my players bought the SSS Advanced book, but couldn't afford anything else. In the past, he might've bought two $14.95 or $19.95 books or three $9.95 or $12.95 books. He's enjoying the Advanced book but wouldn't mind picking up Conan, but he's flat out told me he isn't spending $50 for it.
On another route, a lot of them have been extremely disappointed in 3rd party 3.5 updates. The Complete Book of Eldritch Might, and Hallowed Might have both gotten big thumbs down from those who owned them previously. Too much material not changed, and the lack of change in the art and layout itself was a big mash. Same problem some have had with Mongoose's new Arcane book. Too much reused art and not enough actual updating despite a new school being there.
For what my group would consider a good 3.5 update, the Complete Warrior and Book of Hell both get thumbs up from my players as it does a lot more than just give the 3.5 touch to the older books including new art and sections in them.
I also agree that there was a certain amount of enthusism when 3.0 first hit. At more books come out, the realization that those books may never get used, especially when the engine has been tweaked, has cooled a lot of buying habbits. This is especially tough on backlist products that came out when 3.5 did that still used the 3.0 tools like Atlas' huge Bestiary. I've got friends that state, "When they come out with an online update, I'll buy it." Same for Tome of Horrors I"
The 3.5 updates are a rock and a hard place for many of my friends who either want a 3.5 book, or want the updates to be available for the 3.0 book online before they buy.