I know this may not be the case for most MBers, but I was able to run 5 instances of WoW on my computer with no upgrades on my existing system. I don't have a quad-core.

I have:
AMD Athlon 64 X2 Dual Core 4400+
2gb ram
ATI Radeon X800 XL
20" widescreen lcd
15" lcd

So essentially the cost for me to start MBing was: keyclone $20, and some copies of WoW. Now if I had wanted to buy a computer for each instance I could easily see me spending $150-200 and up per system (for crappy ones at that, that can't run much beyond WoW), and that's not including the cost of acquiring a monitor for each (though I will admit it would look cool). And still that doesn't take into account getting the hardware for keyboard input cloning, etc.

The only upgrade I would consider getting for my current system is more ram, as shatt is laggy as all hell with my current setup. So maybe I will spend $80 on that.

Of course this all depends on your current system specs. Definitely try out multi-instancing before going hardware.

Here I'll make a list:

Hardware Advantages:
Looks cool
If they ban keyclone you won't be affected
(maybe) better performance in some situations
A monitor for each instance
targeted aoe spells?

Hardware Disadvantages:
Depending on your current system, vastly more expensive
Heat output
Technical issues may be more complicated to solve
If they ban multiboxing overall then you're screwed.