In general, it will almost ALWAYS be less expensive to refinish your hardwood floors. If you replace them, you need to pay for additional wood as well as ripping up and hauling away existing hardwood. If portions of your hardwood are damaged (e.g. pet stains or minor water stains), you can replace these sections and when you refinish them and it will all look new. Even if you have this, it will still be less expensive then replacing the whole floor.
One way you can trim your budget is to buy the wood flooring yourself, pick it up and bring it home so that the installation company only needs to install the flooring. If you want intricate details such as borders or inlaid patterns, you can expect to pay more. Keep the layout simple and you can save $1 to $2 per square foot in extra installation costs. Other ways to keep costs down include:
Eliminate any problem spots to make the subfloor level. Sand minor humps down with a hand-held or orbital sander to make the subfloor level. To fill any dips or low spots, use a leveling compound (also known as floor patch). Mix up the compound according to package directions, fill in the dips, then pull your straight piece of lumber back and forth over the spot to flatten and level it with the rest of the subfloor. Hardwood Floor