By modern standards, my 11 year-old XP Media Center Edition computer is way underpowered. But that's okay; I use the sounds of my MIDI keyboard when recording, use very few soft synths and VST effects after recording, and don't know how to use a lot of the effects properly anyway.
Still using SONAR Home Studio 6 XL, too.

Razorwit
Craig, in your case, do you think you would have been able to create the amp simulators that you've made if your only experience with guitar amps was emulations?
 

Very interesting question. However, my experience with amps is not typical...I started playing professionally when I was 12 using guitar amps, but stopped using guitar amps when I turned 18. By that time I was already into creating my own tones with effects, and started using RMI keyboard amps as a full-range/flat-response system (also back then tube quality was much more variable than it is now). So in a way, I've been working only with emulations since the late 60s.
 
The only time I'll use a guitar amp is for recording when I want to get the mic/moving air/room sound, although I have to admit these days I use the CA-X amps almost exclusively because they give the sound I want (probably not surprising, eh?). However, the Line 6 Helix makes sounds I can't get any other way, and it's working its way into my recording process, and will most certainly be what I use for live performance.
 
So basically, the guitar sound I want has always been something I hear in my head, and the CA-X amps are designed to create those sounds. However, part of what I built into them was attempting to emulate the sound of an amp being in a room (I don't just mean reverb, but the varying reflections). 

It's funny that we are here discussing whether software instruments offer the same musical experience as the electronic instruments we have grown to love - the very same instruments that have all but replaced the acoustic instruments we thought we could never do without:)
 
The more things change......

As a songwriter in a single room in my house, I've got little choice than to use mostly software ....but I actually do like it better. Although I have been around studios, I've never run one. I use SPlat to get ideas down, to hopefully, a finished product.
 
There was a time I wanted everything to sound "real", but those days are way in the past. I love the flexibility the virtual instruments provide! For guitars in particular, you can't dial back distortion mic-ing a guitar, but you can't with an amp sim. And you can do it to fit right where you want in the context of the song.
 
I have friends who have the nice V-drums, so I ask them to record with me. I can have the human performance and groove, and then change the sound to almost anything I want with a click. Who doesn't want that????

I've been using a hardware/software hybrid setup for over a decade and don't plan on changing anytime soon.  My main synths are my Virus TI2, Kurzweil PC3X, and Nord Rack 4, but I use soft synths in just about an equal proportion.  I also use real electric bass and acoustic guitars in some songs, or synthesized or sampled bass and guitar in other songs (often both).  Personally, I wouldn't be satisfied making music or doing sound design without the hands-on and performance aspect that I get from real instruments, but I also love the options and efficiency that software offers.

1) Boss EH-50 with button 3 pressed for backing vocals.
 
2) Korg DRV-3000 reverb because it has a low cut that goes up into the kHz range, giving female vocals a halo effect instead of a full-bodied reverb.
 
Other stuff in my rack is just to impress clients.

Thanks to everyone that responded.  I never meant to imply this or that was wrong or right, I just wanted to know what people were up to these days. 
 
I'm mostly a guitar player/singer, but I like that SONAR lets me explore bigger arrangements than I could by myself live.  I have some nice mics, but I would like to add a better mic pre to capture vocals and acoustic guitars.  As much as I love my tube amps, recording them in an apartment is a challenge. 
 
Like many, it seems like a combination of hardware and software will be what I end up with. 
 
With some good mics and a good preamp, hopefully I can take it from there in software.
 
I'm interested to explore what seems to be 3(!) amp sims I have handy in lieu of real amps. 
 
SPLAT comes with an awesome array of VST's, and I have some Waves to mix it up. 
 
When it comes to other instruments, SPLAT provides a wealth as well.  I'll keep the POD XT, Roland JV, and M-One handy just in case...

For me, no sim can replace my tube amp. Simply can't be done, especially since I'm into high gain sounds where sims usually fall down. I love my old samplers like the Mirage and S900. In the box comes close, but I prefer the outboard analog sound. I also love Omnisphere and Reaktor, and for those, there is no hardware equivalent unless you're willing to drop thousands on a modular synth setup. When doing the bread and butter setup of a song, I always go hardware, but eventually things get to a more experimental stage where I utilize software.