We're all different I guess. I'm pretty mean and frugal with myself - mostly by necessity, since if I'm frugal I can have the stuff I need and some I want, whereas if I splashed cash about on day to day stuff, I'd have nothing left to play with. I really can't see me ever paying hundreds of pounds for a pair of wheels, because I can't imagine they would ever bring me the benefit they might bring to someone very fit who competes in stuff. On the other hand, if I had the money, I'd pay out for a recumbent over an upright, because I know it gives me the comfort for long rides. In fact I have, although the recumbent cost me less than that £700 set of wheels - but still more than I'd comtemplate spending on another upright.
Also, it's down to disposable income. Spend the equivalent of two months rent on a pair of wheels, when I'm lucky to have a tenner spare at the end of the month at the moment? But if you're earning enough to save that sort of spare cash up easily, I guess that's up to you. I know that when I do have more money, it's easy to slip into spending it on all sorts of odds and ends.
(BTW, today I have been positively profligate, spending £4.50 on 6 pairs of socks, and £1.99 on Halloween decorations for my trike on the Whitby night ride.)