My personal approach has been to at least a 50% increase in speed, anything less and generally it is hard to notice the increase when you're not running a benchmark. When i've broken this approach i've normally felt disappointed that i spent a fair amount of money with nothing to show for it.
Yet if you wait till you see that big a performance jump, the new chip costs the same, but the old chip is next to worthless. Buy a Q6600 for £190 maybe on launch, then buy a £170 sandybridge, how much is the Q6600 that uses more power but is half the speed worth, £50 maybe.
Buy a penryn for £200 though inbetween and sell the Q6600 for £140, then buy an i5 750 for £170 and sell the older chip for £100-120, then buy a 2500k for £170 and sell the 750 for £120.
It ends up costing you marginally more, and I really do mean marginally, for always having the fastest computer around and not being stuck with a half speed power sucking chip for 4 years inbetween.
Big upgrading once in a while is the LEAST economic way to buy computer parts. Not only has the chip become almost worthless, so has the memory(well maybe not actually, got a great price on my ddr2 mem maybe 6-8 months ago, I'd get half as much now), the mobo will be worth almost nothing, etc, etc.
Depreciating of old parts means selling when they are all but obsolete gets you very very little. With upgrading it can be a juggling act and getting lucky with a great offer, getting memory at the exact right time, selling older memory at the right time.
We had 4gb ddr2 packs for £35 a couple years ago, ddr3 was maybe £55, then it went up and was £80-100 for a 4gb pack, and we're back down to £40 a pack.
The best value chips hold their value the best, a Q6600 was for intel insanely well priced, didn't see another as good value chip from Intel till the i5 750. If you got a QX6800 you'd have seen 60-70% of its value wiped out in a couple years, a Q6600 kept its value far better. Same goes for mobo's, buy the fancy daft £180-250 mobo, 2-3 years later its worth £40 while the cheap £100 mobo you could have bought is now worth £35.
Buy the ultimate "value" parts, depreciating hits you less hard, upgrading maybe once a year becomes a very small cost.
Essentially the choice is £50-100 total cost to upgrade after selling old parts, once a year for three years while constantly having the latest cpu and gpu, or wait and spend £300-500 in one go 3-4 years later, with no value from your old kit, and spend 50% of that timeframe with a fairly slow and power hungry computer....... similar cost but far better value from the consistantly upgrading route.
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) as a result last year I got a big upgrade since I went from a Core 2 Duo @2.13GHz to a i7 930 @ 3.80GHz (OC'd) I have since bought a GTX480 on the cheap due to their current prices and it is blisteringly quick! I will jump to Hex core if I can when the prices come down a lot more since I am not paying £450 for a CPU 
(I buy most of my stuff 2nd hand). Couple of examples: