I don't think it's a "one size fits all" condition. I leave my system on most of the time, 24/7, and notice no decrease in performance.
I have both XP Pro and Vista machines - and the latter boot and shutdown faster than the XP ones. All the comments on memory usage, etc. relate, of course.
I believe the big swingers are what you allow to run in background. Today's users tend to like things automatic - and cumulative actions are often the result. For best performance, keep things non-automatic and make all program updates and update checks wholly under your own control, and you should not see such degredation.