when i was in med school, the definition was when it affects your health, your work, or your family. now it has to do with building up a tolerance and needing more and more to get the effect you're seeking.
"Need" is an excellent point! Whenever someone is willing to risk their job, health, relationships with family & friends in order to make their habit their "top priority". When not having it consumes you makes you irritable or sick it's a sign.
I would add that addiction is also defined by the disregard of the consequences of the action (drinking, drugging, gambling, etc). Responsibilities are no longer a priority and become secondary to getting the high. Addiction is also defined by a physical dependency, which is when it becomes a need and no longer a want.