In fact, I wrote a treatise to that effect for PC World. (See Security Software: Protection or Extortion?)
To sum up, as long as you have a router, Windows Firewall, Windows Defender, and the latest version of Firefox or Internet Explorer, you're safe from the majority of everyday threats.
If you use Gmail, as I do, you're even safer, as everybody's favorite mail service offers server-side, Norton-powered virus protection as well as killer spam filtering.
If not, you can tap Microsoft's new Security Essentials anti-virus software, which not only doesn't suck, but also compares favorably with offerings from industry heavyweights eScan and Symantec.
I also highly recommend Web of Trust, a free browser plug-in that shows you if Web links are safe -- before you click them.
Make no mistake: Security threats are alive and well on the Internet. But if you're an educated user running a modern OS (sorry, XP) and updated browser, you can keep them at bay without spending a penny on security software.
I've been doing exactly that for the better part of three years. Security breaches to date: zero. Think I'm crazy, or right on the money? Let's talk PC safety in the comments.