When doing tea ceremony, a tea bag just feels out of place. It can be an interesting juxtaposition to have a tea bag in a gaiwan (not an uncommon sight in China though).
Probably half of my tea is reasonably good quality local loose-leaf. However, that stuff gets really expensive if you're gonna be a real snob about it (been there). I also have Lipton bag tea and even some St. Dalfour bags along with my TenRen cheap stuff.
I have some nice teaware for brewing traditional stuff, but I also sometimes just use a relatively cheap porcelain mug. For traveling in China and other countries in East Asia, you'll find that many people just toss some tea into the bottom of a thermos-like stainless steel or polycarbonate mug (oh no! bisphenol-A!) and refill it with hot water from any drinking water dispenser handy (drinking water dispensers almost always offer hot water @ 90-100C). I don't really recommend it, but it just goes to show that it's not exactly a revered mystical experience to most people.
Drink what you like, and don't force yourself to drink what you don't like just because some nerd thinks it represents cultural enlightenment or the hipster vegan at the organic food store says it's good for you and cites a Time Magazine article or something.