This is kinda hard to answer, because everyone is different- has different financial situations, different ideas of what constitutes just starting out... I would buy the best equipment you can afford. If you're feeling limited by your current equipment, upgrade. For me, I knew 100%, without a doubt, that I could make my passion of photography into my full time career, so I starting investing in quality equipment right away. At the time I had a relatively secure full time job with decent pay, so everything I earned from photography was gravy and I could afford to invest in new equipment. Before I even had paying jobs I saved and bought things as I could afford them and made a decision not to go into debt while starting my business (although in hindsight, I don't think that would've been so terrible for me).

I started with a Canon 20D (which I bought used and will never buy a digital body used again), 24-70L, and 430EX speedlite. I quickly added a 70-200L. I decided to go for the 2.8 IS version, and I'm so glad I did. It just doesn't make sense to save a couple hundred bucks and skimp for the cheaper versions, when you'll most likely sell it for a lower price only to buy the better version in the long run. Once I started booking enough to pay for equipment, I upgraded to the original 5D which was pretty much life changing. The 20/30/40/50D series just does not even compare to the full frame, in my opinion. The MKII is great as well, but the biggest jump was definitely crop to full frame.

After I had what I considered my core list of equipment (at the time) I slowly started adding pieces, such as a macro, primes, flashes, studio lights, etc. That's pretty much the way it worked out for me.