Well I think the law of diminishing returns depends on what your standards are. For me, it has been Shimano 105. 105 has all the functionality of Dura Ace and Ultegra, it is just a bit heavier. Since I do not race up mountains, a bit of extra weight on the bike is not going to hurt me.
But for people who DO race up mountains, nothing short of Dura Ace will do.
For people without any sort of desire for performance riding perhaps tiagra would be as much or even more than they might want.