"Besides some shoulder soreness, a little water leaking into the tent from the rain, tent stakes bending, and the stuff taking up a lot of room in my pack I haven't had any major problems."

Shoulder soreness and and any amount of water leaking into a tent are major problems. The impact isn't so bad on a weekend trip (you just hike out and go home a few hours early) - but on a 4-7 day trip, in cool, wet weather, a wet tent will quickly lead to a wet sleeping bag and clothing, which will lead to hypothermia - and no quick exit to the car. Can you say, "screwed"?

The length of the trip doesn't really determine whether you need quality gear - it's trip conditions. As long as you're very, very careful about weather, and cancel trips where a forecast for rain or cold will probably overwhelm the capabilities of your gear, you're fine with what you have. But, realistically, the gear you have means you're only looking at trips where it doesn't get colder than 40 degrees, and there's no chance of rain. You won't get to go on those longer trips very often, with those parameters.

I'd upgrade the tent first. The others have given you some good ideas about tents, packs, and sleeping bags. As far as you question about "how much better is good gear?" I'd suggest you go to a backpacking store (Dick's is not a backpacking store) and look at what they're selling. REI would be a good place to start, if one's close by; the local shop, where the sales staff actually backpacks, would be even better. The differences will be pretty readily apparent.

Good luck, and as you begin to choose a new tent, pack, and sleeping bag, let us know what you're thinking - we'll be glad to put in our 2 cents' worth (probably more like a buck and half's worth.)