ok there's a lot of information in this thread that's not completely necessary or relevant so here's the low down. all this is coming from my own competitive gaming experience of more than 6 years.
first of all, in many cases... many mice which are marketed as "basic mice" are just as good as the "gaming mice" you find. check this picture out... it's less than a month old. ESWC 2008 Quake 3 World Champion Cypher.
He endorses and is sponsored by Razer and even makes press statements for them saying the Death Adder is the best mouse ever but see what mouse he is using at the highest level of competitive gaming... a "basic" Wheel Mouse Optical which you can buy for about 600 to 1000 bucks.
It uses the exact same sensor as the Intellimouse Explorer 3.0 which is marketed as a gaming mouse. Now would you pay the extra money for the Explorer? I did as I loved its shape. That's the very first thing you need to look for when buying a mouse.
Higher DPI isn't going to make you aim better. It's another marketing gimmick. I'm saying this after purchasing and using 2 Razer Diamondbacks. The 1600 dpi didn't give me any advantage over the 400 dpi Explorer or Wheel Mouse Optical. Razer's build quality is also terrible but that's a different story.
When buying a mouse to use in fast games like first person shooters, another very important thing is to make sure it doesn't skip. The MX310 is only Rs.500 and it does a really good job. Paying more for the MX518 doesn't make sense if the only thing you're looking at is the DPI value.... don't go by that. If the shape fits your hand better and you absolutely need the extra buttons, go for it by all means... it's a great mouse. However, the difference between your aim using a 518 and a 310 will be close to non-existent.
Finally, if you want something that lasts long, STAY AWAY FROM RAZER. Both my diamondbacks died after 6 months of usage (heavy gaming use but very careful otherwise... didn't drop them). I don't have much experience with Logitech build quality so I can't comment. I bought a Microsoft Intellimouse Explorer 3.0 in February this year and it still works great. However, the paint has started to come off. My 3 year old Wheel Mouse Optical however, is still as good as it was on day one. No problems with performance whatsoever and the buttons are still snappy.
Recommended mice to buy -
MS Wheel Mouse Optical - Around 700. Hard to find though. THIS IS NOT THE SAME AS THE BASIC OPTICAL MOUSE. STAY AWAY FROM THAT.
MS Intellimouse Explorer 3 - Think I saw it for 1500 on this site. Easily available even otherwise for a little more.
Logitech MX310 - Rs.500 in a GO here. Probably the best value for money right now but I can't get used to its shape.
Logitech MX518 - 1200 or so... Worth the buy if you like the shape and need extra buttons but I don't know anything about its durability.
Razer Krait / Diamondback - Same sensor as Logitech MX518. Good performance but I've had a lot of trouble with the build quality. 2 DBs lasted only 6 months before the wiring failed.
Razer Death Adder - Shape very similar to the IE 3 which I like. The sensor is supposed to be very good as well. A lot of people would recommend this but I would buy the Explorer over the DA and save 2 grand. The DPI won't really help your aim. Part of the high DPI = good hype stems from people using 400 dpi mice for years and suddenly switching to one that offers 1600 dpi. The latter is way more sensitive to hand movement. Technically you could call it more precise but when actually playing games, you aren't aiming at single pixels. The real world difference is hardly anything.
Personally, I tend to stay away from all Laser mice as I've read a lot about their problems but a lot of people use some of them without a worry.
To sum it up, don't pay too much for a mouse. Just make sure it doesn't skip. Buy the expensive ones only if you absolutely love the shape.