If you are committed to riding and actually get a lot of use out of your bike, especially since you are racing, even ... I'd say splurge on the better bike. As far as I'm concerned it makes a big difference. Spend as much as you can reasonably afford. Consider buying used. You can find some pretty sweet deals used, as long as you know what you are looking for. Dh spent about $2,000 on ebay on a "barely" used MTB which would have cost $4,000 or $5,000 brand new. He called our LBS owner and asked if it was a good deal and the guy told him BUY IT!

My friend bought the previous year's Ruby Expert and saved some good money. It was brand new, but they needed to make room for the new one's coming in. In fact, right now might be a good time for you to look for last year's models. She bought hers in February a couple of years ago.

Another option is to upgrade your components a little at a time. Dh's first bike was a $700 used Cannondale. He changed out components little by little, adding DuraAce shifters and other high end components. After he upgraded all the components, he bought a new frame and had all the components switched to the new frame. Eventually when I was ready for a road bike (after riding tandem with him for a while), he bought a new upgraded bike for himself, we bought me a new frame and put all the components from his old bike on that frame. So my first bike was (is) pretty darn sweet. Since then, we have changed out various parts here and there to suit what I needed. (A compact double crank set instead of double, smaller handlebars so I can reach the brakes better and am more comfortable in the drops, new lighter wheels for climbing, etc.)

So, another option for you right now is to keep the bike you have and start changing up some of the components. Or upgrade your whole bike with what you can afford to spend right now, but maybe upgrade your components to even better one's a little at a time.