I think that you should upgrade on a need-basis. The only thing driving computer upgrades for mass consumers at this time are computer games. This is a big problem looming over the industry right now. People are waiting for the next app to come out and drive hardware sales but there's nothing on the horizon.
Microsoft tries to drive hardware sales by putting out bloated operating systems with dramatically increasingly inefficient resource usage but very little innovation from version to version (there haven't been any really major innovations in OS for desktop consumers since the Mac - just better screen resolution and color depth) but I think it's one of those Emperor with no clothes kinds of things. Win95 can still handle anything that needs to be done by a typical home user and the UI is not really much different from XP - except for the fact that it is being made intentionally obsolete by not releasing backward compatible applications and by changing file formats to force upgrades in the MS Office suit and other apps. I think that it's all a scheme to get you to buy stuff that you don't need to generate revenue streams for various corporations.
You said that you don't want to upgrade just to play a game. If that's the case - then why upgrade? I would recommend that you just wait until you've got a real problem and do the upgrade then. I'm on a PII 300 and still playing recent games with no problems on Win98. I just had to upgrade my 3d card at one point, but I buy cheap cards behind the bleeding edge curve so it's not expensive.
I think you can get another year or maybe two out of your system. If you don't care about games possibly even longer. I think people pay too much money to get a system that boots up 10 seconds quicker and loads programs 3 seconds quicker. It's not worth $1000+ in my opinion. Save the money and wait 13 seconds.
I work in IT too, so it's not like I don't care or don't know better either.
In summation the only real indicator of when you need to upgrade is when your system can't do the things you want to do and the $1000 expense is justified for obtaining this extra functionality you want - that's a lot of money. It doesn't really sound like you've reached that point yet to me, but I don't know all of the details.
Microsoft tries to drive hardware sales by putting out bloated operating systems with dramatically increasingly inefficient resource usage but very little innovation from version to version (there haven't been any really major innovations in OS for desktop consumers since the Mac - just better screen resolution and color depth) but I think it's one of those Emperor with no clothes kinds of things. Win95 can still handle anything that needs to be done by a typical home user and the UI is not really much different from XP - except for the fact that it is being made intentionally obsolete by not releasing backward compatible applications and by changing file formats to force upgrades in the MS Office suit and other apps. I think that it's all a scheme to get you to buy stuff that you don't need to generate revenue streams for various corporations.
You said that you don't want to upgrade just to play a game. If that's the case - then why upgrade? I would recommend that you just wait until you've got a real problem and do the upgrade then. I'm on a PII 300 and still playing recent games with no problems on Win98. I just had to upgrade my 3d card at one point, but I buy cheap cards behind the bleeding edge curve so it's not expensive.
I think you can get another year or maybe two out of your system. If you don't care about games possibly even longer. I think people pay too much money to get a system that boots up 10 seconds quicker and loads programs 3 seconds quicker. It's not worth $1000+ in my opinion. Save the money and wait 13 seconds.

In summation the only real indicator of when you need to upgrade is when your system can't do the things you want to do and the $1000 expense is justified for obtaining this extra functionality you want - that's a lot of money. It doesn't really sound like you've reached that point yet to me, but I don't know all of the details.