Kelly, it really depends on where you are. In our area (Greater Wash DC) the study shows almost a 100% return on the cost. Actually I just replaced aluminum on my home with Hardie Plank. It was Tyvek wrapped which is a Hardie installation criteria. It is not only better looking but, the wrap helps with air leaks that can be very expensive over the long haul.

So, lets assume an average Hardie installation is around $5-$6 a square foot and you might have 2,000 sq ft of siding. We're looking at $10,000 to $12,000 of cost. The studies show that it will increase the average value of the home by the same amount.

Now, here are my caveats: if Hardie is the standard in your neighborhood, then the expense just helps you conform and you bring your value up to the average of those around you. If vinyl or aluminum is the standard, then I would suspect, everything else being equal, you just raised the value of your home by the cost premium compared to those around you. You differentiate yourself with higher quality amenities.

In my case, most of the newer homes in my neighborhood are built with Hardie siding. So, I am simply conforming to the expectation of buyers looking in my neighborhood.

From a selling standpoint with so many homes on the market, sometimes you have to add the amenities that are expected by buyers just to be competitive.

Now that it's 2007, I am considering upgrading my vinyl siding to fiber cement on my one story, 3 bedroom , 2600 sf home. Is it worth it to upgrade at this point? i.e., how much would the value of my home change?

Here is a WashPost article that hits the nail on the head.
The link blurb says, "Long gone are the days when luxury upgrades lured condo buyers. Now, it's all about lowering the asking price."

http://www.washingtonpost.com/wp-dyn/content/article/2006/12/01/AR2006120100017.html

Me personally, I'd put any remodeling on hold until this market rebounds back into a seller's market. Unless you are adding square footage, any remodel is for the most part just eye candy. And eye candy in a buyers market means you'll have pumped all this money into a remodel, only to have buyers negotiate a lower price.

I'm no expert, I'm just going on a gut feeling... If I was a buyer and I had two homes nearly the same size, layout, etc for lets say $500,000 on Home A and $550,000 on Home B. The only major difference is that Home B has a remodeled kitchen with granite countertops, Viking Cooktop, and supersized side-by-side fridge. Although the kitchen looks great, any frugal buyer knows they could just take the $500k home and upgrade the kitchen themselves for less than the $550k Home B. As such, the Buyer in this Buyer's market will ask for a reduction in the asking price to the point at which the remodeled cost, lets say $25,000 (new req.price: $525k). If the Sellers refuse, the buyer in this market would most likely just walk and take the $500k home and put in the upgrades for $25k themselves.

Overall, what I'm getting at, is that upgrades to a home in a buyer's market will most likely not return much, and in some cases become a waste of money. That's just my theory if I was in the shoes of a buyer who has 20 other similar houses to choose from.

The only upgrades I'd throw money at would be an extension which might turn a 3,000sqft home into a 4,000 sqft home. Save the bathroom and kitchen upgrade for the new home after you finish selling the current home.