At the amature level it is totally competitive. In 2001 I was winning C and B class mx and HS races on a 1993 KX250 and a 1997 YZ127, never did I feel that a new bike would have made any difference in my placement.
The newer bikes are a little better, but the difference isn't huge and in the C and B amature classes no one is coming close to using their bike's full potential. Keep it well jetted, well maintained (engine, chassie and suspension) and wearing fresh tires and you'll be way ahead of the game. You'd be surprised how many people show up to races on new bikes with shiny exhaust systems and terrible jetting, nasty suspension and chassie components and worn tires. This was my approach and I always did well, even got a top 3 start (40 rider grid for MX, varied in hs from 30 - 120) 95% of the time with holeshots about half the time.