FrankJH it all comes down to your definition of capable and what you intend to do with your PC. You could also fairly easily get that way closer to the budget without losing any significant performance.
I'd also disagree about prices being better before, I don't know how long you have been into computers and it does slightly go in cycles but I'd say that now in real terms you get far more performance for your money than you ever have done before. Nowadays even the most basic PC you can specify new can run any office application and browse the internet, watch films and create media(CDs, DVDs etc) without breaking a sweat, about 4-5 years back you would be looking at high-end systems for at least some of those tasks.
It all comes down to the law of diminishing returns and does with pretty any hobby/subject(computers, MTBs, cars, radio models etc etc ad infinitum) you care to name. The final 5-10% is what really costs the money, for say £2,000 you can build a PC that will come within 5-10% of the one that costs £4,000 but to reach the ultimate you have to spend the £2,000 extra or whatever it may be.
Going for what is effectively mid-range is the way I keep myself happy, last time I bought a PC was just over 18 months ago and was around £1,500 including a monitor but it is still a passable specification for what I do(A64 3400, 1gb Ram, 6800gt etc) so there is no point in upgrading just yet.