Originally Posted by Althor
The general consensus from dedmon's simulator on shadowpriest.com is that the 1:1 break even point is around 1400 buffed +spelldmg.
The 1.2:1 ratio would be at around 1600 buffed.
As to how this applies in practice, who knows, but generally the rule of thumb is to assume 1:1 if you're at the 1400 buffed mark at least and to socket all red and blue sockets with spinels, and only socket yellow sockets with pyrestones if there are no blue sockets on the item and the set bonus is at least 1dmg + 1dmg per yellow socket, otherwise use another spinel.
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I think this is bad math. A 20% increase in spell damage will always give a less than 20% increase in DPS. You only get a 20% increase if 100% of your damage comes from spell damage. As it stands, spells do a base damage even if you have zero spell damage. If you would do 600 DPS with 0 spell damage on a fully raid buffed target and 1200 damage with your normal amount of spell damage, then 50% of your damage comes from the base spell values and 50% comes from your spell damage attribute. Since the base damage of 50% is fixed, you won't deal 120% of your current damage until your spell damage contribution goes from 50% to 70%, which means your spell damage must be 40% higher.
At the 1400 spell damage level, I believe base damage accounts for around 45% of damage and spell damage accounts for 55%. To get an overall 20% increase in damage, you'll need 1400 * 75/55 spell damage, which is 1910. I stand by my 1800 to 2000 spell damage estimate for the break even point on spinels versus pyrestones.