Pretty much all the points I spend go towards offense. If it doesn't kill the enemy somehow, then I'm honestly not interested. The single exception is disruption pods on Devilfish, and then only because I want my mounted squads to hit the enemy simultaneously, and DPods are the best way to make sure that happens.
I don't buy Iridium Armor, Shield Generators, Stim Injectors, Bonding Knives, Vectored Retrothrusters, Counterfire Defense Systems, Automated Repair Systems, Flechette Dischargers, Point Defense Targeting Relays, or Sensor Spines. I occasionally spring for a shield drone or two and the occasional Disruption Pod.
No defensive upgrades you give Tau will allow them to survive combat any better than they do already. You survive combat by not getting into it and taking *so many guns* that the enemy doesn't live long enough to assault you. I can't remember the last time I was successfully assaulted by anybody (well, I had one ork boy make it once, and then he was clubbed to death by Kroot). Granted I have not faced a beast-heavy list like Daemons, but I'm reasonably confident my strategy would work better than wasting points on defensive upgrades that are only marginally useful.
To take the Flesh Hound example you keep bringing up, let's run some numbers on likely scenarios.
Okay, so a unit of 10 Flesh Hounds is in position to charge a Riptide--very possible. That there are still 10 of them alive in your assault phase I will grant you pro bono, though understand that such an eventuality is extraordinarily unlikely in most reasonable scenarios where the rest of the Tau units aren't shooting the fast assaulters first (maybe they've got their own teams of 10 flesh hounds to worry about, who knows?).
Anywho, 10 Hounds Charge. Riptide overwatches (assuming no supporting fire--again, a large assumption) with a SMS and a Ion Accelerator:
SMS: 4 Shots Twin-linked = ~ 1 hit (though, were I facing Flesh Hounds, I'd be running Ripple Fire, so that doubles the hits)
Accelerator: 3 shots = probably nothing, but odds are skating *near* two hits.
2 hits --> ~2-ish wounds --> 1 Dead Hound
So, 9 Hounds (or so) hit the Riptide.
(No FNP): 27 Attacks = 18 hits = 6 wounds = 1 lost wound
(FNP): 27 Attacks = 18 hits = 6 wounds = 1 lost wound with a 33% chance to recoup.
Odds are the Stim Injector does nothing.
I hit back, may as well Smash.
2 attacks = 1 hit = ~1 wound = ~66% chance of a dead hound.
In either scenario, the odds favor me winning combat, with the only major difference being whether the hounds lose by 1 or 2. Instability could even take another couple. Next round, my odds for stomping them only improve.
In the scenario where the Riptide loses combat, it is only likely by about 1, with or without the Injector. I'm testing at 66% odds (or so) to stay in combat.
Considering that the Riptide is packing a instakilling large blast and lots of small arms fire to kill off hounds, the chances I'd willingly charge are really low. One volley from a Ripple-Firing Riptide has good odds of killing 4-5 Hounds, which is honestly better than any amount it would kill in combat.
Accordingly, the Stim Injector really adds very little to this scenario--the Riptide can do the same job every bit as well but for far less of an investment without it.
One of the traps of the Tau, in my opinion, are their wargear upgrades. They're cool, sure, and some of them are legitimately handy (Early Warning Override, Velocity Tracker, Disruption Pod, Puretide Engram, etc.), but the majority are more-or-less pointless. Fun, sure, but the points invested quickly add up to a loss of net offense. The Tau cannot support a loss of offense--their complete ineptitude in the assault phase means they need as many guns on target as often as possible.
Feel No Pain is an upgrade best served on units with low armor saves and high toughness. Nothing the Tau bring to the table really fits the bill. Even broadsides should be able to get by without it.