There is not really anything intrinsically wrong with bumping up the MHz, resolution, etc. of the hardware. The problem is really the software, and the fact that the faster hardware lets lamers get away with coding crap sluggish bloatware. Also they seem to want to make everything in bloody 3D, which is irritating and disorientating.
But with this fast hardware we should be never having to wait for anything to load, etc. But even a 1Ghz Wintel box takes minutes to boot up, longer than a 1981 IBM-PC took to boot up!
As soon as the hardware gets faster, that is taken as an excuse to write bloatware. Windows is *ridiculously* slow, so are most programs written for it. If it was run on a realistic-speed computer, eg. 14MHz or so, this would show quite clearly :-) People would not use such a crap OS, they would say, "Much too slow" (and it's buggy, etc. too of course) and would switch to something which could offer reasonable performance. It's not just speed, I could say much the same about hard drive space requirements or whatever.
They would get more people to upgrade if people believed that the EFFECTIVE speed of their system would increase. But they know that Microfilth will just make another version of Windows that it just as bad as the last one, but twice as many bugs and half as fast, taking twice the megabytes (or should that be gigabytes by now :-) ) every year or two. They are in cahoots with Intel to drive the rapid upgrade cycle. It's not even like they are adding any features to Windows that are worth using, is it! None I can think of...
I suspect that is one of the reasons why many of us like retrogaming, it's FAST. Because when those were written people actually valued having something that was fast.
Once cable modems are more widespread you will see many webpages start to bloat too...
So for example there's a 233MHz machine and it is considered slow. Because the software that is run on it is inefficient. The proper solution is not to throw out that equipment and waste yet more money on a 10GHz system, the solution is to run software that is efficient.
VERY little software that is efficiently written should need more than a few Mb. Emulation does require a fair bit of CPU horsepower admittedly, but then there are efficient (eg. Bleem, Fellow) and inefficient (eg. WinUAE, Handy) emulators just like any other software.
If you want some examples of very tightly written software, and of very bloatishly written software, I could come up with lots, but I'm sure you could too :-)