First, let me say that I don't think you need to upgrade to the latest version of any software immediately when it is released. In fact, it might not even be a good idea. New releases always contain a few new bugs. As a rule, I try to wait until there is at least one minor upgrade before I jump in. For example, Mac OS X 10.5 (Leopard) is the most recent release of the Mac operating system. I only recently upgraded though, back in December, when it received its first minor upgrade 10.5.1.
(Version numbers are typically stated in that fashion. 10=Mac OS X, 5=the Leopard release, 1=first minor revision of the software. The net release would be 10.5.2, 10.5.3, etc until Apple releases another major update i.e. 10.6, 10.6.1, 10.6.2, etc)
Additionally, in some cases, I might even skip a version, if I don't think there are pressing reasons i.e. new features, enhanced performance, for the upgrade. In my experience, you usually won't suffer much penalty for skipping one version. If you find you need the new features offered in a new release, then you might want to upgrade anyway.
Now, when should you upgrade? Well, there are 3 important factors in this decision. First, if you wait too long, you may find that any special “upgrade” pricing on the new version has expired and you will have to buy the newer version at full, retail price. Often companies offer a significant discount for users upgrading from an older version as an incentive. Wait too long and you will lose out.
Next, in the worst cases, if you delay upgrades long enough, you may find that the latest version of the software will no longer read your existing files, which were created with the older version. This is an extreme situation, as most software retains some backwards compatibility with older version, but it can bite you if you don't watch out.
Finally, if you wait an extremely long time to upgrade your software, the new version of the software can feel like an entirely new world. For example, users who continued to use Windows 98 until this year, found that any new computer they might buy would come with Windows Vista. While Windows Vista is very similar to Windows XP, since the had no experience with XP, it is almost like they are moving to another, completely different operating system. Had they upgraded slowly, as the new versions came out, even if they delayed a bit, the latest upgrade to Vista would not have come as such a shock.
So, the next time you are contemplating a software upgrade, I hope you will keep these thoughts in mind. It should help you to make a wise decision that best serves your needs and purposes, without penalizing you down the road.