I took a $10,000 a year paycut when I left my previous employer to come to work for my current company... because I felt that I'd be much happier/have a better quality of work-life (old job was starting to destroy my soul / passion for programming)
they wanted to hire me at my previous salary, but it was just not possible under their budgets/etc.
I took the job anyway because I felt their culture and my work quality of life would jsut be a great match.
Now, a couple years later, I've more than made up the difference in pay (proved my worth and the $$$ got found) and am just stupidly happy with this job.
It's actually true that the worst days at my current job are still better than most of the best days for the last 3 years of my previous one.
Basically, I've tried to always value happiness more than pure financial gain, and I've reaped the rewards of "love what you do for a living and you'll never ~work~ another day in your life".