[Boromir88]

skip spence, while you do bring up a good instance where Gandalf does use his staff to perform his tricks, I see it the same way as Eomer. Yes, Gandalf does use his staff, but there are several instances, where Gandalf performs magic without using his staff.

His staff breaks on the Bridge of Khazad-dum, and he still has an epic battle (that lasted for days) against Balrog, fought in the "deepest places" to the "highest peak." Also, in ROTK when Gandalf rides out to rescue the men retreating from the Rammas Echor, a white light shines out, not from Gandalf's staff, but from his hand.

So, the staff just seems to be an ordinary piece of wood (that can be replaced fairly easily), but could be used by those with "power" (such as Gandalf) as tools for their power. I find what Hama says with regards to Gandalf's staff very interesting:

'Foolishness!' said Gandalf. 'Prudence is one thing, but discourtesy is another. I am old. If I may not lean on my stick as I go, then I will sit out here, until it pleases Theoden to hobble out himself to speak with me.'
[...]
'The staff in the hand of a wizard may be more than a prop for age.' said Hama. He looked hard at the ash-staff on which Gandalf leaned. 'Yet in doubt a man of worth will trust to his own wisdom. I believe you are friends and folk worthy of honour, who have no evil purpose. You may go in.'~The King of the Golden Hall

First, Gandalf tries to play off his staff, as Eomer is arguing, it's a 'walking stick' for an old man. I see no reason to think Gandalf is lying to Hama here either, there are several instances where Gandalf uses his staff for support, but Hama is an astute one:

'The staff in the hand of a wizard may be more than a prop for age.'

Hama realizes the staff is an ordinary piece of wood. But this piece of wood could be used more than a prop for age, however only in the hand of a wizard. Hama makes the point, that the power lies within the wizard, and the wizard may be able to use a staff for more than just leaning on. Nevertheless, it's an ordinary piece of wood.

A piece of wood that could be used for support, a piece of wood that symbolizes the authority of the wizards*, and a piece of wood that could be used for magical power, but the last being only in the "hands of a wizard."

*I'll go back to the note of Saruman's "rods of the 5 wizards" and when it's put in context, you can see the meaning of why Saruman said it:

’Later! Yes, when you also have the Keys of Barad-dûr itself, I suppose; and the crowns of seven kings, and the rods of the Five Wizards, and have purchased yourself a pair of boots many sizes larger than those that you wear now.~The Voice of Saruman

Saruman was simply ranting about how Gandalf was growing power hungry. Saruman's last comment seems all to familiar with the "you have grown too big for your own boots." There's no special significance with the "5 rods" it's just a rant from Saruman saying Gandalf was power-hungry.