In my experience, admittedly less than some of the badasses on this board, as stated above, *on a budget*, upgrading the mic is usually the way to go.
However, when you get into higher budgets, it can be just the reverse. Ask yourself this- what will sound better, a Neumann U47 into an Audiobuddy, or an SM57 into an Avalon? It's true that as said above, the pre can't reproduce what isn't there. It can, however, trash what is there. Often a great pre can bring out the best in a *good* cheap mic, and reveal the worst features of any mic, cheap or not. Note that I'm not disagreeing with what has been said above, just pointing out that the way a mic and a pre combine to reproduce sound isn't always black and white. Certain combinations of mic and pre just work for certain jobs. Furthermore, sometimes a cheap mic is the right mic.-Richie