I can think of one downside... ;)
On a more serious note, this generation has definitely headed towards games not being as demanding as in the past. My 2008 rig was humble even when I built it, but it still plays almost every game at medium with 2X or 4X AA (with the exceptions being things like the launch version of GTA4, but even those tend to get patched up later on), and a surprisingly large number of games even run flawlessly at maximum settings (e.g. Mafia II). PhysX doesn't work so well because I have an ATI card, but the games that use physics for significant gameplay features (e.g. Crysis and Red Faction: Guerilla) don't use PhysX anyway.
The way things are going I will be able to continue playing any given new release at medium or higher until at least the next console generation (or, more specifically, the next Xbox, which is what really determines PC tech requirements). Even once that actually happens I may well be able to chuck in a new GPU and some more DDR2 RAM to get back to my medium+ sweet spot; new releases typically still state the now-humble Pentium 4 as the minimum, and I can certainly see the Core 2 Duo filling that role in the future (especially considering its overclocking potential I haven't even needed to bother with so far).

As many people already said, it depends on the game. I'll buy ME3 and DA2 because I KNOW there will be already more than enough for me in those games even in their vanilla version. They are long and enjoyable games.
For shorter games for which DLCs have already been annonced or whose publisher is known for DLCs, I tend to wait for a GOTY, because I have such a big backlog of games unplayed that I can afford to wait. ^_^

I'd wait. There are tons of great games which can be had dirt cheap to tide you over.
Then again, I'm still waiting for Fallout 3 GOTY to drop to $10 to get it, so I may not be the best person to offer advice here :)
Unless you're also running at low resolutions, I'd consider dropping the AA and increasing the other detail settings. Maybe not all the fancy full-screen effects like depth of field, but stuff like high res textures really make a lot of difference :)

I like riding the backlog wave. Buy old stuff that'll keep me busy and by the time I'm ready to buy again, the new stuff is already old or getting sales or gold versions out. The exception is multiplayer. If I'm interested in it or have web buddies buying the game on launch, then it pays to get it at launch. If I'm only interested in the single player, there's really no reason for me not to wait.
This not only helps you get games cheaper, it also helps you keep your computer tech at average or mid level tech, instead of wasting money on the latest video cards. You virtually suffer no bugs (the games have been updated), there are reviews and videos galore and sometimes the drm schemes have already been removed.
I say you wait, unless the plot has some sort of mystery involved and you run the chance of someone spoiling it for you depending on the sites you visit.

The official word from Obsidian is "Let's wait till the game is released before we talk about expanding it eh?"
Obviously given that it's Bethesda paying the bills and their track record several DLC's are a safe bet.

I'm still using a 1024x768 LCD monitor from way back when. :( If I got a bigger one I'd definitely need to do a video card upgrade much sooner, however, and possibly even have to go with the next model up (e.g. 5870 instead of 5850) to stay at my desired sweet spot (using an LCD at non-native resolutions isn't particularly desirable).

IM going to assume the crazy numbers are ATI... err AMD graphics cards? why not look into the 5770 its really nice and perfect middle-0-the-road for price wise