I think it's nice to have nice things if you can afford to do so. I don't have a problem buying something if it's going to make me comfortable. I find that if I'm not comfortable when I'm off the clock, then I'm not comfortable when I'm on the clock, because I haven't had time to relax and enjoy the things that I work to enjoy.
Function is great, but personally I need to be comfortable to function or I'm not as productive as I could be. I'm not saying this is for you, just how I feel.
That said, perhaps you should take the advice and upscale your surroundings a little more. I don't know what to suggest specifically because I don't know what kind of furniture you like, what your living space specifically looks like, or how much you'd be willing to spend etc so you'll have to do that yourself. But maybe think about what kind of houses you admire, get a few catalogues and go to some home stores. You don't even need to commit to buying, just take a look around and see how some things make you feel.