We generally choose better quality fixtures (plumbing and door hardware especially) because we believe that the fixtures will wear better over time. I am surprised by how some budget items (a faux chrome toilet paper holder comes to mind) tarnish and look worn after only a few years of use.
So where's the balance? Think about where you find joy in your home. As you research your renovation, visit many, many specialty stores where you can handle the components you are considering. Feel the difference between a $20 and a $5 cabinet pull. Open a door that has a budget lock set and then one that has a higher end lock set. If there is a difference, how much do you care? Some people have to have granite counters but couldn't care less about the lighting. Others need high end plumbing fixtures but are happy with vinyl on the floor. We chose IKEA cabinets but installed a beautiful concrete counter top. It is important to remember that often when you choose the 'low' side, you are often compromising on quality.
The best advice is to find a trustworthy sales person at your specialty store who will work within your budget and will advise you on quality. McLaren Lighting, Victoria Specialty Hardware, Decora Tile, etc. have knowledgeable and friendly staff. Do not be afraid to state up front what your budget is, even if you think it is too low. They will explain what more money gets you.
One final story. When we were renovating our house, we couldn't find the perfect dining room chandelier within our budget. The one we found was $1000, way too much for our budget and home. So, we picked up an IKEA light fixture that could act as a place holder for $30, thinking that we would continue to look and perhaps would special order a light later on. Two years later, the light hangs proudly over our table. Maybe we don't practice what we preach.