There are some programs whose purpose itself generates the need of having the latest version. This kind of programs, like antivirus, anty spyware, firewalls, need to be updated to be fully functional, so that they can stand against the latest known hazards. The same reasoning can be applied to programs that are used to access internet, such as navigators, mail clients, rss readers. Some operating systems also fall into this category, as does any program that has a free patch that improves it's stability/speed/capabilities/security.
All these things have to be up to date simply because it's necessary, if they are not updated they loose efficiency. This is why we can say that we update this programs because we have to, it's a real need.
Another different situation is where we find out they are releasing a new version of a program, and we can update if we pay for the update. Before deciding if we are going to make the change, we have to evaluate carefully if the program we already have covers the needs we have, and whether the new program corrects any problems we have with the old or covers a real need we already had. Let's clarify it.
* Needs: If what we already have covers what we need to do, we don't need more, the update isn't needed.
* Points of failure: if anything on the actual version makes life hard for us and it's corrected in the new version, it might be worth to update. This has to be carefully checked, a demo version might do the trick as long as we don't blind ourselves with flashy candy.
* New and shiny: Of course, new versions bring lots of small little preety things. It's highly probable we won't use 90% of those, so we won't need them even if they are good looking (refer to the demo explanation above). You'll need a cool head to evaluate which new things are really needed for the things that you do (or plan to do).
By evaluating this three points, you'll see that in most cases we don't really need the upgrade, so it would be best to keep our money for other things and keep using our 'old' and trusted programs. Don't forget that hype and marketing are part of the price of every program just because the company needs to generate the need for the program to get money. So we will be told we can't live without that things, but we need to be strong and be able to think for ourselves to check if that beautiful phrases hold truths or lies for us.
Don't forget also that with any new version of the program there's a training time needed to be able to use it in an effective way. That's why a lot of the new and shiny stuff will be unusable for us at first, and can be forgotten and never used just because of lack of time.
Lastly, this would not be complete without one final word of advice. If you are facing a need for a non free update, take a little time and check for open source alternatives. As you are already faced with a retraining period, it might be worth training yourself in a program that's free and has free updates, a program that you are free to give to your friends if you like it.