As KRyan's answer mentions, casters shouldn't be relying on wands nor on wondrous items for offense—casters should be casting offensive spells. The saving throw DCs against the caster's offensive spells will typically be higher and the level-dependent effects of the spell more significant than if the same effect is generated by a magic item.
Casters will find magic items more useful for defensive and utility spells that don't worry about saving throws and have largely caster-level-independent effects. Even those poor souls that can't cast spells usually have something better as a level-appropriate go-to offense than what they could do with an equally level-appropriate wand or wondrous item. Offensive wands and other magic items are typically niche items when used at all, useful for emergencies or against unusual foes.
However, there's another thing to consider when trying to figure out why a wizard whips out a wand of maximized wand of magic missile instead of an unlimited-use, custom-made cloak of maximized magic missiles or whatever when she's faced with a gang of ghost minotaurs.1
The DM must approve all original magic items
Magic item creators don't use feats like Craft Wondrous Item (Player's Handbook 92–3) to create limited-use or unlimited-use command-word-activated wondrous items, magic rings, magic rods, and magic armor, shields, and weapons that replace all the other magic items because creating new magic items like these is supposed to be an arduous process.
I know that this seems weird but bear with me. In the core rules, a PC that wants to create, for example, a scroll buys raw materials, plunks down for a day or so in a clean, well-lighted place and Hemingways an arcane scroll of power word pain or whatever. When he's done, he's out one or more prepared spells, some of those mysterious raw materials, and a handful of XP, but he has that magic scroll. (Don't be alarmed if you fluff this differently; I'm simplifying for comparison.) Relatively speaking, creating a scroll is easy, and it's almost as easy—albeit usually much more time consuming and expensive—to create a potion, a wand, and most staffs. (Some magic staffs like of the woodlands and of power, though, are rebels that play by their own rules.) Such magic items are, bluntly, merely spells awaiting use that have been slapped onto parchment, poured into a bottle, or put on a stick and have tables that dictate their largely inflexible prices.
However, those other magic items—the ones that are not just spells awaiting use—are supposed to be much more complicated to create if they're new, original magic items. The Dungeon Master's Guide on Variant: New Magic Items says
In the same way that you can invent new spells and monsters for your campaign, you can invent new magic items. In the same way that a PC spellcaster can research a new spell, a PC may be able to invent a new kind of magic item. And just as you have to be careful about new spells, you need to be careful with new magic items.
Use the magic item descriptions in this chapter as examples on which to base new magic items. A new magic item needs all the information that similar, existing magic items have, possibly including activation type, activation time, and caster level. You should also be ready to determine the market value of a new magic item, even one that the PCs simply find, in case a character wants to sell it or duplicate it. (214)
Whether they're created by the DM or by the PCs, creating new magic items at all is a variant rule. I know, right? Seriously, in the core game—although I've never heard of anyone playing the game quite this strictly—unpublished magic items don't exist. Just about everybody uses this variant, though, but it's worth noting that not everybody must and that it is a variant, so the core rules assume this variant is not used.
Further, the Dungeon Master's Guide on Behind the Curtain: Magic Item Gold Piece Value says
Many factors must be considered when determining the price of magic items you[, the Dungeon Master,] invent. The easiest way to come up with a price is to match the new item to an item priced in this chapter [of the Dungeon Master's Guide] and use its price as a guide. Otherwise, use the guidelines summarized on Table 7–33: Estimating Magic Item Gold Piece Values.…
You’ll notice, however, that not all the items presented here adhere to these formulas directly. The reasons for this are several. First and foremost, these few formulas aren’t enough to truly gauge the exact differences between… two very dissimilar items. Each of the magic items presented here was examined and modified based on its actual worth. The formulas only provide a starting point. [Some] items require at least some DM judgment calls. Use good sense when assigning prices, using the items in this book as examples. (282)
(Link mine.) So if the PC's allowed to—that is, the Variant: New Magic Items rules are being used—, "[i]n the same way that a PC… can research a new spell, a PC [can] invent a new kind of magic item." This means the PC goes through a process like Researching Original Spells (198), spending time (it takes weeks) and treasure (it takes thousands of gp)—typically in a metropolis—researching how to create the magic item and, at the end of the process, the PC makes a Spellcraft skill check, and, if the PC succeeds, the PC knows how to create that one new magic item… except that it's still up to the DM to decide if the magic item is viable, and "[a] viable [magic item] is one that you[, the DM,] allow into the game" (ibid.). So if it turns out the magic item that the PC researched is not viable, all the PC now knows is that she can't invent the magic item. The PC's time, treasure, and awesome Spellcraft check result are otherwise all wasted.
That means it's really the DM—not the PC nor the player—that the game expects to develop new magic items because only the DM knows what's viable for his campaign. PCs are left to guess what's viable, and nobody wants to waste time and treasure on guesswork when there are plenty of published magic items already.
In short, trying to work out the economics of magic item creation based solely on Table 7–33: Estimating Magic Item Gold Piece Values is worse than trying to assemble a puzzle without a picture as a guide. Stripped of details and context provided by the Dungeon Master's Guide, the System Reference Document makes it appear that a magic item creator would be a fool to create some magic items in the form of potions, scrolls, wands, and staffs when the creator could, instead, create a magic ring, magic rod, wondrous item, or magic armor, shield, or weapon of far greater utility. However, in context, making a new, original wondrous item is supposed to be far more difficult than, for example, just slapping a spell on a stick.
I should note that in my experience PCs rarely need to create their own new, original magic items, but that's not because I make them adhere to the painful, the-book-says-I-can-be-a-jerk Original Spell Research rules (which, as you can see, this DM finds a bit of a drag). Instead, it's because I make it clear that if I can't find an equivalent magic item to the one proposed then I'll have to make up the magic item by comparing it to existing magic items. This usually leads to the player doing the research and finding an existing magic item that's at least close enough to the PC's needs.
That's because, honestly, the Dungeons and Dragons 3.5e corpus is so vast that when a player says that she wants a magic item so her PC can do something wacky, it's not only possible but likely that somebody somewhere has already written up a magic item that allows her PC to perform that wacky task so there's no need to create the new, original item out of thin air.
Table 7–33: Estimating Magic Item Gold Piece Values is often used in discussions about the things that can be done using table in a vacuum, sans a DM,—a +1 sword of use-activated true strike, for example, or a button of unlimited cure light wounds—, but such magic items are supposed to be allowed into an actual, run-by-a-human campaign only after—perhaps—such items have been thoroughly researched and after—absolutely—the DM has ruled such items are viable. Prior to that, discussion of such items can only be had in the abstract.
1 A gang of ghost minotaurs is totally a thing; see Manual of the Planes 58.
