For me, my old BFG 8800GTS 512 OC is still cranking strong. No need yet. I usually stay about a year behind the new stuff and buy what is considered by then 1 tier lower than the best.
I think you get much better value for the money that way. (For instance, about 1 1/2 years ago I paid $169 on sale at Frys for the 8800) so, until I decide to get a monitor that is higher in res than my 19", I am okay for now. This old GTS still hits 15,000+ in 3Dmark 06, won't run with the big boys by no means, but it's no slouch either, not by a long shot.
No, not at the rate of advancement in performance and games hardware requirements.
Hell my current one is probably overkill for what I play as it is. However, my card may be on it's way out after I got some display corruption with it only at 80C on the core, whilst a removal of the HSF and new paste put on and a small amount of dust removed helped reduce temps by 10-15C and made the problem go away, I am still wary.
The biggest reasons for upgrading or sidegrading is probably problmes with current card, a new game they want to desperately play in all it's glory or a monitor upgrade in terms of resolution.