The upgrade treadmill is just fashion and marketing.
There's a big movement towards emulators among the gamer scene I'm able to observe, because a lot of gamers are realizing that games haven't become fundamentally better in the last decade. Yesterday evening at a friend's, the Wii was forsaken for a Genesis; it's surprising how entertaining those games still are, because we've been conditioned to think you can't have fun without being cutting-edge.
You're right, we are conditioned to value the wrong things. The same game with more polygons is the same game.
30 years ago, my father and his brothers played Atari. I grew up with parents that both understood video games, at least somewhat. There's nothing objective about the way we view video games, or any other form of media.
For instance: I primarily look for media with some sort of emotional power, which is all-but-impossible to find in video games. I can think of perhaps five or six video games that had any emotional impact on me. I can name far more movies that have had a similar impact. My secondary search is for polish, and there movies also have an edge over modern games. The things I look for aren't what you look for, though - they're subjective. I remember having much more fun on an SNES than I did with, say, the Xbox. Your milage varies.
I'm guilty of playing this game along with everybody else, but at some point we'll realize that we don't need all of what we've got, and we'll start being satisfied with it. Hell, I can see myself sticking with the laptop I've got right now for a decade.
That's called getting old.
The fun of chasing the new is half (or more) the point.