@ Ged

"A more reasonable explanation would be that the increase in processing power is an exponential curve and although Moore’s law can be observed over a number of years, this is only a small part of the picture."

In fact Moore's Law predicts an exponential curve. The correct explanation is almost certainly that the curve is ogive in shape - that is, S shaped. Every other growth curve is. (This is why all the predictions of "the spike" or "transcendental human experience in our lifetimes" are such utter bollocks.)

Also, Moore's Law is related to feature density, not processing power, performance, or anything else. There are fixed limits to feature density (for instance, the diameter of a silicon nucleus). It obviously won't last forever.

@ You ain't gonna need it

I'm running radiosity precomputes, massive builds, raytracing, pathtracing, etc. just to make a single game level look nice. Others do this stuff just to generate a single image. Iteration time is king in the creative industries. We need to do stuff faster. Computers aren't only for running Word. If that's all you care about, the £300 computer will always suffice. As would a piece of paper and a pencil.

Problems grow to fill the available processing power. Just look at Vista :p