I once had occasion to accompany my craft master on a trip to see something or other. He drove (it was a 1969 Fiat powered with, as he described it, a sewing machine motor) and, try as I might, I couldn't shake the impression that we were both about to die. In conversation he mentioned that he wouldn't let his wife drive because he would then be subject to the nagging fear that someone else on the road might manage to get an advantage on them. Typical arms-race-think. But I have to hand it to him. For all the Fiat's deficiencies in relation to the bloated, overpowered '70s American boats wallowing in the traffic around us, with a fearless attitude and a lot of attention to detail, he made good on his intention to drive in the fast lane and give no quarter.
It is this nagging feeling that someone, somewhere will have a device that can make images our camera cannot that in large part drives sales. Even if we almost always shoot far from the camera's limits, the idea that we don't have the option to do something that someone else with more advanced kit can is a strong incentive to buy, buy, buy. For an A-list pro shooting at the edges of the possible that's understandable while, for others, it's arguably unnecessary. Why, of course we are, each and every one of us, just as good as the camera we own! Not!
However, it's good for camera makers and helps to fund (and make sensible) the development of even more competent cameras. But at the point that the camera's limits lie generally outside the normal (or reasonable) run of photographic opportunities or outside the capabilities of the average user, it becomes harder to justify a new camera for both the manufacturer and the average likely consumer of the product. At this point sales will drop to represent simple wear based replacement rather than replacement plus discretionary upgrade, i.e., just where the camera companies were before the digital bubble - hardly where the companies want to be if they wish to approach matching Moore's Law.
What generally escapes remark is that along with this increased competence comes a ballooning of complexity that makes each successive camera more and more difficult to learn, at least for a novice. Someone coming to a current DSLR from a film body is going to have more trouble than someone upgrading from the previous iteration. The jump from film to D600, D800, D7100, etc is much greater than from film to D70. The D70's menus are only about half as extensive as the current bodies'. I made the film/digital transition from OM-2 to an Oly 3030z and I was initially stymied by the menus which, were probably even less extensive than the D70's. And now I sometimes come a-cropper with the D70's menus and scratch my head thinking, "Whaddaya mean it can't do that?"
At some point this complexity will become meaningless, cease to be a sales advantage and turn into a liability (why buy features you don't understand or have no intention of using?). For many, I suspect, that's just about now and they're either buying P&S cameras or, more likely, opting out and buying smart phones.