LiveJournal is self-sustaining, but history has shown that the more hardware we buy, the faster our growth rate. (In other words... people use the site when it's not totally slow.)
All this money will go towards more fun hardware, the photo server(s), and setting up a dedicated server for paid users as a backup, should the main cluster ever get slow. (However, lately we're making great progress on load balancing nicely ... our goal is to never have the site get slow again.) Regardless, we'll put the money to good use for fun LiveJournal features and speed. One thing it'll go for is making the directory faster (currently the directory's database server doesn't have enough memory).
If you plan to use LiveJournal for the next 4 years and beyond, this is a good deal. If not, maybe you just want to donate to LiveJournal and you have more money than time. (if you no money but you have time, talent and/or dedication, join lj_biz and introduce yourself)