I don't buy whatever is cheapest, but rather whatever gives me the best value... I've noticed that sometimes the generic items are the most inexpensive because they are also built very cheaply and so breaks or doesn't work quite as well as the name brand item. So even if the generic is a 1/3 less than the name brand, if I have to use twice as much (or buy it a 2nd time within the name brand's life expectancy of the item), I'm actually losing out in the long run. I found that out the hard way when I bought (or actually received as a prize on some FC-like GPT site) a stand / stick blender from some unknown company; everytime I tried to use it, it would uncouple the blender attachment from the motor base. I ended up throwing that one out and purchasing a Cuisinart one that I am still using several years later.
Also name brands tend to have more coupons and sales... So it sometimes works out to be less expensive than the generics when taking into consideration all of the specials on the items. This is esp. true for any item that has just come out on the market; usually the name brand manufacturer will offer out coupons with large savings in order to get more people to try out the item. For example when the Mr. Clean Magic Eraser first came out, the store had a big sale on them as well as P&G offering some big coupons allowing me to get 2 for less than half the price of 1.
Finally I may sometimes purchase the name brand if I really like the manufacturer and want to see more products come from them. You have to remember that part of the reason why some name brands are so expensive is because they are trying to recover the R&D costs that went into discovering and manufacturing the item, while generic companies only have to recover the costs it takes to make the item. This is esp. true of health and beauty items (although every once in awhile they come out with some amazing food items too).
But I'd have to say that for the most part, I don't see a difference between the name brand and the generic items so I tend to purchase those instead.