I use the "nifty fifty" f/1.4 and it does great for a shallow DOF. Out of all of my lenses, the 50mm f/1.4 and the 70-200 f/2.8L spend the majority of time on my camera.
I debated the $98 versus the $349 when I was looking for a 50mm. I researched it and read the reviews and bought the f/1.4 for several reasons:
1) The bokeh difference is amazing, the 1.4 blurs so much better (due in part to #2)
2) The 1.4 uses 8 blades for the aperture, and the 1.8 only uses 5. Highlights are more rounded with the 1.4. The 1.8 is more pentagon shaped.
3)Light fall off/vignetting is prevalent with the 1.8 at wider apertures
4)The color and contrast of the 1.4 is a step or two above the 1.8
5)The 1.4 has a wider focus ring. The 1.8 is thin, at the end, and hard to get at with a lens hood on.
6) the 1.4 uses a metal mount, the 1.8 is plastic (I've had a plastic mount ear snap off during a winter shoot. I later learned that frequent lens changes weakens the plastic mounts)
The main rule is to buy the best lenses that you can afford...properly cared for they will last forever.
My 50mm started its life on a Canon D30, and now is in the 1D gear bag (will follow onto the next camera in the future).