The machine you are looking at is a great machine. It's what I have now, and it's plenty for what I ask of it. At the time I bought mine, the difference between it after upgrades and a similarly equipped retina machine with the dongles and such I would have needed was something like $700. Now the difference is much smaller, but the ability to buy a machine on a tight budget and upgrade to the specs you want/need as the funds become available is a big draw. The retina machines are not upgradable, short of finding a used SSD on eBay.
It used to be that our machines were limited primarily by the amount of ram available, as we would ask them to handle more data than could store in ram and that would lead to continuous reading/writing from the hard drive which is much much slower than reading and writing to ram. Now we can get machines with enough ram for many users (a few would like/need more and always will). Now, the biggest bottleneck is reading and writing from the hard drive, as things can be read into ram and processed faster than the drive can write the new data and read in the next info needed.
The hard drive speeds set how fast your machine can read data into memory and how fast it can write new data to the hard drive. The higher the speed, the shorter the time it takes to do something. The easiest times to see how the disk speed affects your work is during the machine startup and application launching. A machine that takes about a minute to startup with a spinning hard drive may take 15 seconds to start with an SSD. There are some applications that take a long time to load, i.e. a lot of time to read data from the disk. When you put them on an SSD, they launch almost instantly. Applications like Adobe PhotoShop and Mathematica come to mind here.
Apple currently uses 2 interfaces for hard drives. One is SATA that has been around for quite a while now. SATA comes in 3 varieties, I, II, and III. With each generation, the speed doubled. SATA I is 1.5Gb/s, SATA II 3Gb/s, and SATA III 6Gb/s. These correlate to roughly 125MB/s, 250MB/s, and 500MB/s (The fastest SATA III drives deliver speeds of ~550MB/s). The other interface is PCIe that is capable of delivering even faster speeds.
If you can make it to an Apple Store, Best Buy or other retailer to play with the machines, try restarting the retina and non-retina machines, launch some apps, and you will see the differences that the SSD makes.
As far as i5 vs. i7, in the 13" model, all of the processors are dual core, and the performance gains, particularly in your day to day usage will be minimal. The differences are that the i7 is a little faster and has a larger cache, but the price for the upgrade is pretty steep to gain a few percent in performance (most of it coming from the difference in clock speed, though the cache sizes affect it a bit). Once you start bumping up the specs of the 13" machine, you start getting closer to the price tag of the base 15" model that comes with a quad core processor that can perform more work quicker.
It's not like we are in a time like the 90s and early 2000s where even an idle computer was using something like 30%-50% of the processing power. Now, our machines idle while only using a few percent of the processing power, and are capable of performing the tasks we ask of them much quicker.
I know things are kind of simplified here, but hopefully it explains some of the biggest differences.
If you absolutely do not have the money for a new machine, the upgrades will breath new life into your current machine, and it will feel completely new, and you may have an old machine that will keep ticking for years, or one that could die tomorrow. That is the biggest drawback to upgrading the old. If you can get $450 out of your current machine, the price difference of $650 becomes much more manageable. My biggest problem is I run the machines until they die (or get killed by my kids), so they aren't worth much afterwards, so I'm always on the hook for the full price tag.
