Traffic or conversions

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With figures being released about search engine usage and the volume of traffic being fielded it is easy to get hung up on the whole process of optimisation and the never ending goal of more visitors means more conversions means more money.

To a degree this is correct, ultimately there is a correlation between conversion rate and traffic, so gathering more increases the number of conversions.
Traffic is expensive, whether it be from paid search, online and offline advertising or natural search the competition is going up and so are the costs. So forgive me stating the obvious, but wouldn't it be better to analyse your current traffic and experiment with how to increase the percentage conversions.
As an example, in a recent project from 500 visitors a day, which had a bounce rate of 70% and a conversion rate of 0.2%. By changing some of the layout, cleaning up the call to action and taking out some of the erroneous clicks, the bounce rate dropped to less than 20% and conversions increased to 4%.

If this had been attempted by volume of traffic alone to gain a 4% conversion the traffic would have needed to increase from 500 to 10,000 per day. I can just see the adwords rep rubbing his hands.