Does Caffeine Really Make People Feel Better?
Many of the claimed beneficial effects of caffeine are being called into question by recent research, much conducted by Professor Jack James and colleagues at the University of Ireland, Galway, which suggests that caffeine offers little to the habitual user beyond the relief of caffeine withdrawal. Habitual users do develop a physical dependence on the drug. When deprived, even overnight, they experience symptoms including fatigue and sleepiness, mental fogginess, and a reduced ability to work (see research by Roland Griffiths at Johns Hopkins). James has argued that the apparent effects of caffeine to get you going in the morning result only from the reversal of the withdrawal symptoms that appeared overnight. His group has conducted several research studies that confirm that such reversal of withdrawal accounts for many of the improvements in mood and mental performance noticed by habitual coffee drinkers. These studies call into question whether coffee drinkers actually get benefit from daily consumption, beyond the acute treatment of their physical dependence or "addiction" to caffeine.
Many people who quit caffeine report that the early morning fog disappears within a few days. They awaken feeling more rested and ready to start the day, without caffeine.
Research studies by Professors James and Griffiths can be found online using PubMed. The evidence suggests that the negatives of caffeine dependence may be greater than most coffee drinkers realize.

To me, this statement by Dr. Lane is the really the crux of the issue. For years we have heard conflicting data on the health effects of caffeine and coffee, and the widely ranging debates have covered health issues such as miscarriage rates, risk of MI, blood pressure elevation, fibrocystic breast changes, and most recently type 2 diabetes . So, let's just call the actual health effects of coffee a wash for the moment and just consider the psychological effects.
The lay public hears reports of studies such as the one quoted in the first comment and thinks that this means that coffee makes anyone smarter and more alert. In a short-term sense, this is self-evident: think about how you feel after a large cup of coffee. Did you need a research study to tell you that? The hidden secret, which inexplicably is almost always omitted, is that, because of physiological adjustments that your brain makes to its neurochemistry over time as a response to the caffeine in your body, your mental baseline without caffeine is much lower than it would have been had you never gotten addicted. This is the basis of addiction: you need your daily dose just to function normally. So, yes, if you take a coffee drinker or a non-coffee drinker and test them for their immediate response to coffee, they will both be more alert, faster, & etc. in a short-term sense, but the missing piece is to compare the all-day performance of the coffee drinker to his/her performance prior to being addicted. That's a much more difficult study.
I was not previously familiar with Dr. James' work until I read this brief piece by Dr. Lane, but a quick pubmed search immediately revealed an interesting reference that deals with exactly this issue. In the abstract he states, "It was found that researchers have generally failed to take account of the fact that habitual use of caffeine, even at moderate levels, leads to physical dependence evidenced by physiological, behavioural and subjective withdrawal effects during periods of abstinence . Consequently, there has been near-complete absence of adequate methodological controls against confounding due to reversal of withdrawal effects when caffeine is experimentally administered." It strikes me that this is an obvious and shocking miss by modern medicine , but the explanation isn't far off... just take a quick look at the website for the Vanderbilt University Institute for Coffee Studies, a prominent and vocal proponent of coffee's health benefits : they are supported by all sorts of international coffee organizations. One of the first things that young doctors learn when analyzing studies is to look at who supported the work... draw your own conclusions about that one. Just as one indicator, someone see if you can find a single reference to esophageal reflux disease on that website... I couldn't. See my post elsewhere in this forum concerning the silent epidemic of reflux disease, to which the rising use of caffeine is undeniably contributing.
The simple truth is that caffeine is an addictive drug that, currently, appears to have mixed, though mild, health effects. From a psychological perspective, if you're a habitual user, you will feel better after you drink it in a short-term sense because you got your fix for the day. However, the only way that you will know how your baseline and all-day performance, mood, libido, alertness, and so forth are affected by the addiction is to quit for a few weeks and try to get a general sense (after withdrawing) as to whether or not you feel better.
A recent study found that moderate coffee drinking increased speed, strength and endurance in coffee drinkers. The effect worked in both regular and non coffee drinkers.