My experience both with big and small companies that it is cheaper to buy new than to upgrade. Labor costs kill the ability to benefit for network, server and desktops upgrades.
As for resale there is generally no resale value left in a computer. The life cycle of a desktop PC is 3 to 5 years. Most PCs are processed and disposed by a company that is hired to get rid of the hardware that meets EPA requirements. I am paid to pickup, wipe the hard drive with a DoD utility and I donate them to a local organization that recycles PC's for the disadvantage people.
I agree with your assessment about size. This does however come into play with notebooks, cell phones and PDAs. With desktops there is no benefit. However the funny thing is the smaller is more expensive.