If it's a game that I'll sink many hours into like an RPG or RTS or that I've been eagerly anticipating, I buy it as soon as I can. There's something to be said for playing games and discussing them when everyone else is playing them too.
Other than that I assign a value to a game that I'm willing to pay and buy it when it reaches that amount. Be it $5 or $50 less. The economy makes me choose my larger purchases like major appliances, groceries or gas more carefully but music, DVDs and games are unaffected as their prices are more stable and consistent.
I take the same approach on both points.
For example, when Assassin's Creed came out I knew it was a game I wanted to buy...but not at $60. I figured it for under $20. I got it used at a buy 2 get 1 free sale from EB/Gamestop. It averaged out to about $12.
Even for new games, though, I look for a deal where I'm getting more than just a game for my $60. Like the recent Gears 2 deal that included a 1600 points card. The card pretty much offsets the cost of the game by $20 so it's as though I got Gears 2 for $40.
My vote was to cut back on both for awhile. I figure it'd give me opportunity to catch up on my backlog. But if you find a deal you can't pass up...don't, otherwise you'll be kicking yourself later.