OK, many here are speculating that we've hit the peak, or even that prices will come down once the war in Iraq is over. I think they are completely missing the reason prices have gone up like they have.
India and China, with their billions of people, are modernizing at a tremendous rate. That has pushed up the price of gas and just as gas prices may fluctuate seasonally but the overall trend is up, I think the price of ammo will keep going up (though there may be occasional short term fluctuations). Why? Just as India and China has pushed up the oil market, they've pushed up the commodity prices of many metals (including the lead and copper that is in our ammo). They are no where near slowing down or levelling off. Thus, prices will continue to go up.
If you want to use it as an investment, why not? You like it, you know something about it, and prices will go up. However, as others have said, it isn't as easy to despose of when it is time as stocks or a bank account, and it needs storage space.
I think the better way to approach it is to buy up as much ammo in calibers you use now, and in calibers you plan on acquiring later. Prices won't be coming down, so stock up at today's prices. Then, you are secure in the knowledge that since prices will be going up, should you decide to part with your guns in a caliber, or not acquire a gun in a caliber you've stocked up on, you'll be able to sell your ammo stocks at a small profit.
For investments I think I'd go with the stock market right now. Prices are generally down right now- that is great news for buyers. Just be sure to do your research so you are only buying strong companies, and you can be pretty sure to see some decent returns in the future as the market rebounds.