this question has many levels:
1) are people who buy expensive bikes suckers who were fooled by the marketing of expensive bikes?
Perhaps, but most likely not. Riders who love high-end bikes are usually pretty well-informed about materials and geometries and I think most will seek out a variety of opinions before they make a decision.
2) do you buy expensive bikes because you think they will make you a better cyclist?
A lighter bike with light weight wheels will allow you to ride faster up a hill. A lighter bike and wheels usually comes at a higher price. However, for many people, the biggest benefit to buying an expensive bike is that they will train longer and harder to "live up" to the bike, so I think in most cases the answer is "yes".
3) is an expensive bike actually any better than a 1000 dollar bike, or is it all *perceived* because we know how much the bike costs?
I thought 1000 dollars was expensive? 
But seriously, expensive bikes are usually better - it's not always just perception based on price. However, the marginal improvements decrease as one begins to look at more and more expensive bikes. In other words, the difference between a $600 bike and a $1,000 bike are often a lot more than the difference between a $1,000 bike and a $2,000 bike.
4) are bikes art or jewelry, where you pay more for looks?
Yes.
5) is functionality the only thing to consider when buying a bike?
No. If you're spending a lot of money for a bike, you want to have a bike you can fall in love with. Functionality is only part of the equation.