Having upgraded my late '99 vintage sawtooth (G4/450) with a 1GHz processor and added a 7200rpm ATA drive, Pioneer A106 DVD burner and a second video card to drive an additional two displays, it's like a completely new system. MUCH faster. I also scavenged a pair of 256Mb RAM sticks from a disused PC to boost memory, and that also helped. Total cost was about $350. I use it for video editing and some Photoshop work, along with the usual array of typical internet, email, wordprocessing sort of tasks.
To me, the advantage is the sheer flexibility of this approach, because you can pick and choose which elements of the system you want to concentrate on most to give you the capabilities you need. Thus for me, storage capacity wasn't entirely critical, but I needed to make sure my projects were secure, so I have three drives installed; one a SCSI drive to which I boot if I am using Photoshop, and two 120Gb ATA drives for projects and backup. I find multiple displays useful so I can have the main workspace on one, toolbox and extras on a second, and even additional applications on a third to save shuffling around Expose. But because I don't need raw power, I didn't bother with a more expensive CPU upgrade since 1GHz seemed sufficient - and has turned out to be just that.
We each have our own idea of what constitutes a good system to meet our own needs - upgrading an old G4 is the cheapest way to get it!