Here's a couple of my hard-earned cents...
I started out, like most, doing extract/steeping. Not too far into it, I started attempting some small partial mashes. Eventually, after about 10 batches, I gave up extract and went exclusively partial mash. About the same time, it started getting cool, so I felt confident ordering liquid yeast. I also bought an aerator kit.
This was about the time when I saw the biggest up tick in quality.
When I was given a 50-liter SS MLT, I started upping the grain:extract ratio in my PM's. The quality kept getting better, as my control and experience with mashing increased. Then, I thought, I've been mashing for awhile, and adding smaller and smaller amounts of extract...why not try AG? And so I did.
The verdict? There was no magical transformation there. I don't see a huge practical difference between a PM with a high grain:extract ratio, and an all-grain recipe. I believe, honestly, that it's more of a principled difference...an ideological one.
And so, given that I like to do 2 batches side by side when I brew, and given that I have three 32-qt kettles, my latest game plan for brew days has been to do one PM and one AG. That way, I can split the AG wort up into two kettles for a good boil-down before I combine them for the actual boil...all the while, the PM is boiling right next to it.
So, before this post gets too long, I'll come to my conclusion on the matter: what matters most, in my experience, is that you have a large proportion of your sugars from the mash. The difference between a mostly-mash and an all-grain is imperceptible to me in all but abstract principles. Malt extract is still a staple for me, even after 33 batches. It allows me to make the high-gravity brews that I crave without an absurdly long boil time (due to huge strike and sparge water volumes), and also allows me to do PM's and AG's side by side until I buy a 10-gallon kettle.
And, most importantly, after 33 batches, my best so far (Dark Horse Stout v1.0, Smoked Porter, Hop Beatdown Double IPA) all have extract in some proportion or another. That should tell you something. The stout was my last extract/steeping batch, and a beautiful beer. So just remember, great beer can be made with extract---but eventually, adding syrup or powder to water and fermenting it just gets a little...pedestrian. That's my opinion, at least. I love this hobby, and the best part about it is making up my own recipes. Given the small selection of extracts, (and given that extract-y cider taste), mashing is the logical path after awhile. I won't knock extract (like some have already done), but just say that going partial mash and all grain is probably where you'll end up.
Lastly...now that I have a grain mill and a 55lb sack of gleneagles maris otter, I'll probably be doing a lot more AG and using a lot less extract, given how stupidly expensive the stuff is.