I've just completed an upgrade of my digital studio, which has been an interesting and mostly painless process. The last major setup I went with was in late 2005 with this:

The new setup is this:

Pretty much everything was replaced except the screen, keyboard and mouse. The last couple of revisions of the Mac Mini have had the ability to drive 2 screens independently at 1920x1200, and assuming this capability remains, the next upgrade should only be the computer itself. Going from a final generation G4 mini, to a new Core2 Duo is a pleasant speed bump, and the stock 4gb of ram is enough to work within for now. These new ones will work with 8gb in them, and that's really the only limiter on the work I do.
The new graphics tablet, yeah it's the biggest one Wacom make now, and it's good to be back on a large format tablet, BUT there are some things worth grumbling about. Mainly the buttons around the touchring, they're spongy with little to no mechanical click, too little travel, and they require too much force to activate - so not so good for holding down like the space bar in photoshop for scrolling around. They don't really match the quality of a piece of hardware that cost more than the computer itself.
Dell 24" flatscreens are pretty good value now - if you're a student you can get their top end one for $600 or so, which is about half the price they were back in 2005 (stunned by that)
The other nifty thing I did with this setup was to replace the screens' stands with VESA arms that bolt onto my shelving:

(It's like hentai back there)
This clears the desk under them, and it's surprising how much room those baseplates take. More importantly, if someone comes by with their xbox for a bit of network gaming (cause Dell put about half a dozen inputs on their screens), it means you can do this:

...and run a console on each screen. It also makes getting to cabling etc much easier. This should be the setup I'm working within for the next few years, and it's proving remarkably nice so far. I don't think you can ever have too many screens (anyone else get a woody at Mr Universe's setup in Serenity?), and for me, CPU is the least constraining resource now - the lowest end macs are several times faster than anything I've done production on previously. It does get somewhat warm in front of all that illuminated glass, however.
cheers
mattg.