This game is hard enough for beginners. Telling them to use old equipment and bad balls will do nothing to grow the game. Sure, very few may find benefits in the long run, but many won't. Even worse, many would just quit, especially beginners that started later in life and don't have the hand/eye coordination or the time required to learn while using unforgiving equipment.
That said, obsessing over equipment can be a bad thing. Most players won't benefit by upgrading their 2006 game improvement irons with newer models, and today's drivers are not so much better than last year's that you need to drop another $400. Like others have said spend that money on lessons and practice.
But at the same time don't begrudge people that like to play around and tinker with their equipment, no matter what their handicap. If they like getting new equipment because it makes them happy then be happy for them. If they go on and on about how their game has improved, how their launch angle is better, etc., then let them and just take what they say with a grain of salt. Maybe being more knowledgeable about these things will help them in the long run.
Still, everyone should have decent equipment, regardless of handicap. I see people at the driving range where I work part time using old (and sometimes damaged) sticks and not understanding why they are struggling. A girl was there the other day trying to use a stiff shafted 3-iron blade, would anyone tell her to stick with that because she will be better off in the long run? I don't think so. Using quality equipment that is properly and professionally fit – to your size and swing – benefits ALL golfers.