Although one of the functions of my rig (guitar or bass) is to be loud [i]enough[/i], a too-loud band spoils it for me both as a player and as an audience member.
My rule of thumb is: If I need to use one or more earplugs, it's too loud. I should explain I have some damage to my right ear, which causes it to be over-sensitive, so that loud sounds (especially in the upper mids) create a crackling effect. Depending on my position in relation to the other instruments, and their volumes, I may end up using one earplug or two.
When I had my own band (i.e. I was the boss!) we never played so loud that I needed earplugs, just loud enough to get the music across with a bit of excitement. Having a sensible drummer helped of course, and keeping my (skinny-string) guitar volume reasonable didn't force the bass player into volume wars.