I always end up using a combination of items on Al. Sometimes they're fairly pricey, and sometimes they're much less so... It just depends on the outfit I'm building. There are almost always a couple of gold shop items involved.
That said, my guy (being a static character-) does have a certain minimum "bottom line" that will always be added to the final total, no matter what his clothes and props cost, and due to the nature of those items (His white body dye, Jinx eyes, Ashen bangs and wings in particular-) they often end up making up the vast majority of the design's market worth. I could put Al in 1g Starter Commons and he still wouldn't be cheap. That's just a consequence of the character's basic appearance.
I'd use the same base items on him rather they cost ten gold or 200 million, though. It's not a matter of "showing off"... It's just making Al look like he's supposed to. To me, an item's value is really only determined by how useful it is to me. I don't give a rat's bum what the Marketplace thinks of it.
Hmm, yeah it's possible to do many of the cosplays with gold shop/sponsor items but some people are perfectionists and want their avi to look as close to the actual character as possible. Sometimes it's the quality of the higher priced item or just the proper color which attracts them to it rather than going with the knock off version.
Personally, I usually create original designs so it doesn't really matter as much whether it's a cheaper or more expensive item, as long as it suits my needs and makes my avi look the way I want it to. Sometimes, I'll splurge if I really like the item and I think it has enough poses I'll use or if the color combination is just too beautiful to pass up.