KPGurl, don't let the bahstids get you down! They are SO not worth the wasted energy! Some people like to throw their weight around and in their own minds, they are THE authority on everything. The more they badger you with their opinions - not facts! - really, the more insecure they are. Take heart from that, and don't give away your personal power.
Don't you love how LYS owners love to rag about products they conveniently do not carry? Funny that...
In my world, rude folks reap what they sow. I can't tell you how many times I've gotten rolled eyes or quips about my pattern, my yarn, or my equipment. Yes, I have a couple of Addi Turbos - but I also just went down to Wrights' Factory Outlet (sadly, the store near us is being moved to another state and they're selling out) recently to buy a ton of Boye needles. I like the old button style better than the new plastic ends on Susan Bates', because with the Boye needles my knitting doesn't fall off the end! Today I just ordered, by way of a test-drive, Options interchangables for one needle size, with three cables. I'd been using Addi Turbo Lace needles on this Rona shawl, but the cost of two more Addi needles just to finish this project was ridiculous! As far as I'm concerned, anyone who rags me or anyone I care about on account of my/their needle choice can look forward to having a fun afternoon in the ER having said utensils removed from their person.
In terms of yarn, I agree with both of you. Knit what you can with what you can. If I'm making an heirloom piece (ie, lace shawl) for a relative, I may use a better yarn - making that same pattern for myself, I'd probably use a recycled sweater or what have you. I have this thing for knitting out of odds and ends lately - I think I must have a little Mrs. Weasley in me. I don't waste my time with really trendy garments, because if I'm going to take the time and the expense knit something I want to wear it until it falls apart. Classic lines look better on me anyway.
About the only thing I'm a 'snob' on, and it's more for practicality than any pretense at poshness, is acrylic fiber. There are two charities I knit for (Afghans for Afghans and the Snuggles Project). One only accepts wool goods; the other, they'll accept acrylic but after a scare at home with our own shelter-adopted beagle (she'll be 2 next month), I only knit/crochet in cotton now, as according to our vet that has a better chance to pass through should a dog decide to get chewy.
I love silk and cashmere, but have yet to play with them. Alpaca suits me fine as a cashmere substitute.