Heh! When does an automotive hobbyist/enthusiast stop pouring money into "feeding the passion"? Or, say, a pilot/plane (or helicopter) enthusiast?
I'd say that the answer is not cut and dried, but like so many "big" questions: "It Depends"!!
As has been said, a gear upgrade can (or should) help you to attain your goal as a skilled, excellent photographer. This can apply on different levels, as we've seen in the answers here. For example, you may want technology that gives the "max" of IQ yields, so that you can, for instance, produce a large gallery-size print that will withstand close, expert viewing/evaluation (or likewise for many commercial output uses). Or, you may be moved to branch into a field of photography that is well-served by state-of-the-art technology, either in camera body performance or in lens performance (or other added functions).
Believe me, these are considerations that have a very valid base for consideration. For example, say you are moved to venture into wildlife photography, for example, shooting birds, but you find that 1) you never have enough "reach" and so you need to look at longer (more expensive and heavier) lenses, and 2) your camera/body can take a good photo but you know that other/newer bodies have the reputation for a faster, more accurate auto focus, and moving up in the quality also can improve the IQ of such challenges, where a good lens/body combination can produce images that when printing/viewing large (or cropping a usable frame) will show the finest detail that you can imagine! Or if shooting sports, again, you will want the body/lens combination that will capture the action while producing the sharp/crisp details of the players! Or, say you decide to move into high-quality portraiture, the kind of quality that could land you in nice magazines, maybe in the glamor or high fashion fields...well, besides the basic camera/lens needs, you also have the world of lighting to deal with! Or, let's talk about Macro photography!
Ah, yes, we see how these things can (and do) lead us down "the path"!
Well, then, what else do do we look at to address the "It Depends" point of view?
Obviously, finances has to come into play. For instance, there is equipment that has come out over the years that can cost as much as buying a house! For many of us, we wouldn't consider that idea, but we'll spend say $10,000 and more for our hobby, not to mention those who depend on photography as a source of income. So, finances is a major consideration!
Then, like I mentioned, you will consider a new "field" or "fields" to enter into, and you'll quickly have to ask yourself: "How 'real' is my motivation to enter into this field?". For example, I may want to play with Macro shooting, which calls for special lenses, lighting considerations, and time/practice to develop the skills and techniques for "knock-out" macros of bugs, flowers and such. However, I also really want to get into wildlife and bird photography, which has another set of requirements! So, what should I do? Well, the only one that can provide the answer is you/me, the person who must choose and commit both time and money!
Well, then, there comes a point where I'd have to address another consideration, and that's that "life changes" can hit! For me, the last 10 years have seen growth in my photography, but then some serious changes that built up on me and brought things to a bit of a stand-still.
So, I spent about 3 of those years building up equipment and following my chosen "fields" -- wildlife/birds, macro, scenic/landscape, street photography, events, and sports fell into place (of course costing plenty, but I could at the time afford those costs).
Well, then, things in my life took turns. First, I stopped buying gear, although the gear I had was serving the various goals I was pursuing. But that wasn't the end -- further changes put further "crimps" in my life, things that limited my ability to get out and do the shooting I was inclined to do, but then, causing me to sell some of my best gear, both a quality body (the 1D Mk III) and several quality lenses...I was left with two "older" bodies and a few older lenses. But, I didn't sell everything, I can still use the gear to get the shots I got say, 9 years ago...
Something funny came up one or two years ago. I was out and stopped at a "thrifty" electronics shop, second-hand stuff. I wanted to just check the place out. Well, as I was moving toward the exit, I passed the front counter. I glanced down, and there was a box filled with little odds and ends, I rummaged a bit and found a little old compact/point and shoot camera...
Funny, because such cameras marked the beginning of my digital photography, 15 years ago, I used them but moved into the DSLR "world", all my little cameras died...
well, I picked up that little old camera, and the store manager began offering deals, starting at maybe $25, but went down to $5 for a little working camera! How could I resist?! And I actually spent time shooting with it!
Well, that was the last of my spending on photo gear for at least this span of time!
Well, I'll stop babbling...have fun and move forward in this stuff!