It's true that you don't necessarily need a fast cpu for many office tasks (I'm running a 1.3GHz CPU), but once you have tasted faster systems, its difficult to go back.
An analogy: I still have an old 12x CDR drive, which will burn a CD in around 7 mins, which is more than adequate, but once you get used to 2 mins (52x) then 7 mins seems like an eternity.
Same for processors and office applications, a fast CPU makes scrolling through large documents, and recalculating spreadsheets feel much quicker and smoother, though saving a couple of seconds here and there, doesn't actually matter much in reality.
So why do users even bother to upgrade at all then? Why do fast CPUs sell?
The answer is because there are times when you do need the horsepower of a fast CPU, and then that old slow 1 GHz just feels so inadequate and tedious (e.g. games, graphics editing, software development, video editing, zipping files, copying/moving large files, etc.) that it stresses you out. However, just as you say (Mic), most of the time that 1 GHz is more than enough for most of us, but for times that we need more, it simply isn't going to cut it.
No one likes an unresponsive computer, so faster is always going to be better, even if you don't really need it (all the time), and that's exactly why many of us eventually upgrade. If speed didn't matter, then why does anyone even bother to take notice of benchmarks?
You only need to take a look at this site, and others, to see that speed does in fact play a significant factor in our buying decisions (like it or not), and saving money by buying a slower CPU, is not something most of us are interested in unless we have a restricted budget and can't afford to spend any more.
Having sufficient power now, helps prepare for the next round of bloatware that is just waiting to be released, and means we can hold off on that upgrade for a little while longer. A 1 GHz CPU is certainly not enough for me, and I don't believe many other users here would swap their faster CPUs for that 1 GHz P3.
PS: Mic, I noticed that you are running a 1.8 GHz P4, despite the fact that you say 1 GHz (and even 500 MHz) is more than adequate. Not meaning to be rude Mic, but perhaps you should practice what you preach.
Edit: Speed is relative - what is fast to one person, might seem slow to another. It basically comes down to what is the current 'norm' at that particular time, and 1 GHz CPUs have long since been overtaken by much faster processors. Even an old 486 CPU will run Office software, though it will feel like wading through treacle.
