I too have had to ask myself this question. But generally my conclusion is that I would try to hire contractors when I'm reaching capacity, i.e. consistently 50+ hours a week of work (don't forget you still have to spend some time that isn't related to generating income, i.e. invoicing, accounting, proposals, etc). Try to work with sub-contractors, who you know you can hire in an ad-hoc basis, but are still of a high quality.

Once you start to reach the next level of growth, i.e. consistently 70+ hours a week of work I would look at hiring someone full time, or at least first in a longer term capacity.