Your ears will certainly play a large role...more importantly, it's more like whether or not you
want your ears to care. Some people just don't want to give a rat's ass about audio. Case in point, back when I still owned the Sony MDR-R10s, I could parade them in front of my roomates all I wanted, but they just did not care for a listen. I'm sure they wouldn't care even if they did listen. As a result I didn't even have to worry about my roomates trying to sneak a listen in while I wasn't in the room.
On the other hand, if you do care, and want to turn it into a hobby, you WILL learn real quickly how to do intensive listening. I've already ran into a few young 'uns myself that sound as if they've talked in audiophile hubbub their entire lives. And that's where you will start appreciating better sound regardless of a pricetag (unless it puts you out on the street of course). I think urs said it best in another thread when he said that you will spend based on not only your income, but also on the value you place on music. The more you value music, the more you will want to spend on it. I think those two variables are what affect all of us the most when looking at the monetary side of audio. But in my opinion, good music reproduction is priceless.
With that said, some of my own choices for that bang for the buck award are the Koss KSC-35s, Sony MDR-V6, Grado SR-325, and Etymotic 4P+4S adaptor. My own ears say you can still get much,
much better then that, but after that, expect to pay at least 50% more then the previous amount to get to the each 'phone higher up in the headphone chain. So in terms of performance I don't think the Etymotics are where the diminishing returns kick in, but the Etymotic's price point is definitely where things start going up steeply. I honestly don't believe diminishing returns even apply between different headphone companies, rather only within a headphone company's own product lineup, i.e. HD580s to HD600s. And I do honestly think the more expensive headphones are worth their pricetags. Still, keep in mind even up in the upper stratosphere of headphone land, you're still playing the game of "what sounds best to your ears". It's just that, IMHO, you've eliminated quite a number of competitors by then.