You buy a diamond engagment ring because your soon to be fiancé wants to you buy her a diamond engagment ring. Sure, it's a tradition created by the diamond industry, but is has taken hold for the past 50-100 years or so and now it's the reality.
If your girlfriend is okay with you not buying her flowers on Valentine's day, then she'll probably be okay with you not buying her a diamond engagment ring. If she gets upset with you saying Valentine's day is for Hallmark, and let's not celebrate it, then guess what?
In the end it's your choice and if you love her and she loves you then the ring is just a symbol and can be anything, a piece of string if you both agree.
If in the end you decide to buy a diamond, be smart, spend a reasonable amount of money (I would say as much as you can *afford*), and research the heck out of it. I spent probably 40 hours researching the diamond I bought for my (now) wife, and when I did the math, the amount of money I saved paid me for those 40 hours better than my full time job does. And I don't have a crappy job.
Not to mention the rock is quality, beautiful, and I can be proud of my purchase everytime someone looks at it. Because I had a budget, I got a diamond that would have sold for twice my budget in a jewelry store. I also could have gotten a diamond of the quality of my budget, but paid less.
So research. Learn the 4 Cs. But that's just the beginning. I'll tell you right now - cut is the most important. If you have a big stone with poor cut, it looks like crap, and even if the stone is small, a well cut diamond will shine and look great. You see this truth of quality also reflected in the prices, unfortunately.
Also keep in mind that you aren't buying a ring, you are buying the diamond. I recommend buying the loose stone and having it set, but beware of having the stone out of your sight at any time - get it appraised after every time it dissappears behind a jewelers doors, and never trust any but a certified independant appraiser. If you by a diamond in a setting, there is the possiblity the setting is hiding some flaws, or if it is gold, the color could be more yellow than you think.
There is a forum called diamondtalk which has a lot of knowledgable people if you want to ask questions or look for resources. There are also a lot of vendors so keep that in mind.
Lastly - get a GIA certification. Or AGS if you must, but GIA is the authority.