... when the difficulty leaps to an incredible high, or the exchange price drops, you're screwed.
...unless you can make money from transaction fees, or bitcoin-based DNS, or whatever else the future may hold. For sure though, buying hardware is a speculative gamble. GPU mining would have been very profitable for ArtForz because he started early when the difficulty was low. For the same reason, mining with custom hardware will work for him if he's first-off-the-block. But for most of us, the economics of generating is marginal.
Of course there are other reasons to generate apart from monetary reward. It's quite satisfying just to be part of the movement helping to get Bitcoin established.
PS: Anyone who is buying hardware for generation, why not click through the affiliate links at bitcointo.com
and claim your bitcoin reward. I got 35 bitcoins back on my purchase of a 5870 card. Thanks to noagendamarket, the operator of that service.