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The power supply doesn't just run the power to the different parts of the computer. It needs to run different voltages to different parts, and besides that, it has to deliver them within a very tight range set out in the ATX standard.
Power supplies went through a phase of being extremely unreliable. This is because the actual parts are very cheap and standard and the profit margin in the power supply business is higher than almost any other computer part. The flooding of the market with poor quality power supplies led to lots of failures and complaints.
More recently, the problems in that sector have decreased, the general quality and build of power supplies has increased to a level where nearly any power supply will deliver what it claims it will and within specs. Most, but not all.
As with computer monitors, power supplies are one part that does not need to be upgraded very often. The only additions have come from SATA specific power plugs and the additional P4 plug in recent years and even those are not always necessary.
So what do you actually need from a power supply?
The most basic requirement is that its power output can match the power needed by the components inside your computer. Each part has its own requirement and its own maximums and minimums on what it needs. The claimed maximum power for each voltage are added together to give the power rating for the power supply.
The main power user in the computer is the CPU. Some Pentium 4 processors are known to gobble lots of power. Hard drives use some power too, but no more than 10W each, optical drives even less. The motherboard itself uses some too. The other major user of power are graphics cards.
As graphics cards have become more powerful, and with the advent of Graphical Processing Units (GPUs), which are like CPUs which are dedicated to graphics work, and situated on the graphics card, they can now use more power than a CPU. If you are running a very fast PCIe graphics card or a pair of them, you will need more power.
At the most basic a 300W power supply will be more than enough for most day to day use desktop computers, even if they have a small AGP graphics card. Only get more than 300W if you know you need it, or expect you will need it in the future after upgrades. 500W will more than suffice for even the most demanding system with 2 graphics cards, but it needs to be a reputable brand.
Enermax, Antec, Fortron and Seasonic are good names in the power supply business, you will not go wrong with their products. Even though there is a small price premium, the security in knowing that nothing will go wrong is worth it. Another power supply I like is the X-connect from Ultra. Each of the cables that come from the power supply are removable, so only the ones you are using need to be in the box. Very convenient and neat, as long as I don't lose the cables.
Pre-assembled computers are known for having the cheapest power supplies in them. As no-one really checks the power supply when buying they just put the minimum inside. These are usually fine, but will often buckle under the load of extra upgrades you may make. Bear in mind that you might have to upgrade the power supply when installing those new, really cool graphics cards.
So, keep these things in mind...
Stick to major brands
300W only unless particularly needed
Functionality before looks