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The other week I read a pretty poor article on a graphic designer’s website which tried (and failed) to clarify the difference between a logo and a brand. They were sort of on the right lines but not really (= euphemism for not at all).
To really understand the difference, you have to define what a brand is.
My definition is this:
A brand is the sum total of all of the activities and messages that convey - through whatever media and tools - who you are and what you do (whether “you” are a business or an individual).
In essence it’s what you want people to say about you, when you ask them what first springs to mind when you say your name or company name to them (some marketers call this ‘brand equity’).
When you look at it like that, your logo becomes just a single tool in your brand arsenal - albeit perhaps the clearest visual representation of your brand.
But your logo is not your brand, it’s part of it - along with tools like your voice, your speaking style, your writing style, your attitude, your beliefs, your language, your logo/brand colours, your uniforms, your website, your core values, your mission statement, your employees, the way you treat your prospects, customer service and the list goes on. Note: You can replace “you” with “your company”.
So is it worth paying hundreds or in some cases thousands of pounds to have a professional logo created? The answer to that depends upon what you want people to say about you when asked!
(Although with the definition I’ve used above, in my personal opinion no logo is really worth thousands of pounds given that it is only one part of your brand).
But I can quite easily think of several businesses where the first thing that comes to mind for me (being a primarily visual person) is “Ick, they need a proper logo, they look so unprofessional.”

Thanks for the comments guys - what, in your opinion, is the *best* (most memorable, strongest visual representation etc.) logo?

I personally can only think of a few companies which have absolutely no logo at all. I agree that a logo is only part of one's brand, but it is still important. Anything that can help customers remember a company, or provide easier recognition, is a way to increase exposure and profits.

Hi. Your post caught my eye because it's was something I was thinking about just last week.
When I had my first business cards made (my networking suited cards, no job yet) my dad and I designed a logo together and it not only made the card look more professional, but it brought about discussion with whoever I was giving the card to. In which case, if you have the skill and ideas, make your own logo!
I think that a logo really completes one's brand, as you say, "perhaps the clearest visual representation of your brand". It's just part of the package, and should induce ideas, marketing, and overall, be a fun experience to create.
...as a side note, I wouldn't spend more than $400 to 'spruce up' my logo. My new personal one is still in the making...as are my niche and experience...
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