If you don't know exactly what you want and aren't sure how much you're willing (able) to spend over the long haul, then I think you upgrade pieces as you go, one at a time if that makes the biggest improvement, more than one at a time (spreading the money available) if that proves more satisfactory at any given moment, but being sure that after every upgrade your system sounds significantly better. If the improvement is subtle and the equipment isn't where you want to end up, you're probably just being impatient. If the improvement is significant and the equipment isn't where you want to end up but it's going to be several years before you can have it "just so", well it's going to be somewhat more expensive but you're going to get extra years of enhanced enjoyment out of it as well.
One point from other posts that bears repeating is this - draw up your dream system today and buy it over several years without updating the dream based on all the new splashy reviews coming out of newer gear. It's amazing how the $50K dream system becomes achievable for less than 1/2 that just a few short years away. This, to me, is the biggest value of having your eyes set on something you know you can't afford for years - while you're saving and getting closer to the goal, the price is coming down and if you can resist the temptation to change your goal to the latest-and-greatest model and remember how much you wanted the now-discontinued (and heavily depreciated) model that still works every bit as good as it did when you began the dream, you're miles ahead financially. -Kirk