Though I use mainly software plugins it's actually more because my mixes rarely has less than 400 tracks, and even trying to buy well over 400 compressors would seriously kill me. Or my wallet, whichever comes first. All convolution-reverbs are also software, as most I've used about 20 in the same reel (Some otherwise good Altiverb impulses have the annoying habit of not being true stereo, even less surround), a serious wallet-devastator had it been hardware.
If I find a nice hardware effect or processor I like, I use it. Not because I have to, but because I want to; as an art-form, much of a sound designer's personal sound is actually based in things like that. But there are things I simply can't find being good enough in software at all, like tube-coloration, amplifier effects, analogue reverbs and delays (have a few spring-reverbs and a disc-echo), bitcrushers, and many other things. I these cases I see no alternative as the software equivalents simply doesn't deliver.
Among the hardware I use regularly are my already mentioned spring reverbs and disc-echo (true grit. Love it.), my Boss SE-50 (adds a nice muddy texture suitable for lofi and thickening backgrounds), SSL-compressors (beats the living daylights out of practically every other compressor I've ever heard! Including the Manley!!), Behringer compressors (can make a very interesting pumping effect, and gives color), analogue synthesizers (the filters are absolutely orgastic), an Amiga 600 & two 500's (bitcrushing and sampling), a Commodore 64 breadbox model (kick-ass real-time programmable filters with bite!), several different guitar-amps, mostly solid state (I can't afford a purely tube-based amp right now), as well as a collection of tape-players, reel-to-reel, dictaphones, wax-players, VCR's and such. And a lot of smaller effects not really worth mentioning here right now as the list already got a little long :-)
It's also very easy in comparison to circuit-bend most hardware and machines, whereas a software plug can be virtually impossible to modify at all. Of course most of my hardware effects and processors is something that must be used very carefully, but after all it's in the small details the whole gets its shine :-)
There are no right or wrong here. You do what you consider best for the project and to reach your and the director's personal vision. For me, I work absolutely best with my fingers on sliders and controllers (almost said knobs, but for an Englishman that might come out wrong ;-)). Of course I do have controllers for Nuendo, but it's still not as intuitive as just reaching for the effect/processor of choice. Also, any kind of lag and stutter generally really frustrates me to no end. Not as big a problem today as it once was, but it's still there.