I have been using hardware and software both for a long, long time. At one point I sold off all of my hardware and did everything "in the box." What I came to realize is that I no longer had FUN producing music. Yes, computers are capable of a lot of amazing things these days in the realm of music, but if it isn't fun and inspirational, what's the point? These days I am 100% hardware once again. I think that the reason why many people prefer software is because they are too cheap to actually buy hardware. Let's face it - most "producers" these days are running pirated software, pirated VST's, pirated samples, etc.
Also, many musical instruments appreciate rather than depreciate in value, especially if you keep them in good condition. It is not at all uncommon to sell a piece of gear for more than what you actually paid for it, especially if it is vintage, analog, and/or rare. I know that many people claim that there's no substance to the "hardware sounds better" argument, but that simply is NOT true in my experience. Hardware definitely sounds better. That's not to say that software sounds like crap, but if you're a true audio mad scientist like me, it's hard to deny.
Many VST instruments and effects are modeled after real instruments, and although they might sound okay on their own, when you compare them with the hardware originals, the difference is like night and day the majority of the time. I love the Arturia Arp 2600 emulation, but does it sound nearly as good as a real 2600? Hell no! Not even close! For me the differences (however miniscule they may be) make owning hardware soooo worth it. All I use my computer for music-wise is editing samples and digital recording. Half of the time I don't even record digitally... I record straight to analog tape.
Building up hardware is expensive and it does take space and dedication, but the fun factor simply cannot be matched, even if you have a super powerful computer and a midi controller or two. Besides, who is proud of their VST collection? lol
If you're a bedroom producer who never plays live gigs and doesn't have much money to spend, yeah, you can get great results with nothing but a laptop and a midi controller. However, if you ever want to put on live sets, 98% of people would rather see an act using a hardware rig. It is more interesting, more mysterious, more interactive, and YES - sounds better.
Just my 2 cents, of course.
---------- Post added at 06:47 PM ---------- Previous post was at 06:29 PM ----------
Other things to consider:
Once you buy a piece of software, it basically becomes worthless after purchasing it. Good luck reselling used software that isn't basically brand new. In no time at all, they tend to become outdated and worth next-to-nothing. Some software isn't transferable at all from owner to owner. As operating systems continue to evolve, there will be a time in which some stuff will no longer be compatible. Hardware doesn't have this problem. Also, what you can actually do with software is limited by the specs of your computer. Try inserting one too many instruments or effects and you get audio dropouts. This never happens with hardware. You rarely if EVER have to worry about a hardware unit crashing. In fact, nothing I've ever owned has done that, but I've had plenty of crashes when using various DAW's and VST's. This would be absolutely unacceptable in a live scenario. If you play keyboards, the latency when using midi controllers is also unacceptable. Even if you have a fairly good interface with low latency, the latency can still cause many problems and limit the amount of technique and expression you can use while playing. Another major issue with the ubiquitous nature of software-based producers is the fact that people tend to be far less experimental these days. Most people use presets, or slightly modified presets. I can spot them instantly. The sheer amount of patches and options is kind of overwhelming and it is easy to get bogged down... it seems a lot easier (for me) to focus on production with hardware. Another thing that sucks about the fact that software is so accessible is that people tend to be really cookie-cutter these days and make really unoriginal, uninspired music. (look at what passes for "dubstep" these days)
MPC 1000 w/ JJOS - Korg ESX - Korg EA-1 - Ensoniq EPS 16+ - Waldorf MicroQ - Roland Alpha Juno 2 - Yamaha TX81z - Mackie CR1604 - random rackmount and pedal effects