If any of these scenarios apply you should upgrade.
When you want to.
When your current OS does not support hardware you are upgrading to.
When your current OS is no longer getting support.
Donald E is exactly right.
I would add that I know people still running Windows 95, 98, and 2000 on computers not connected to the internet. If you are not upgrading your software or hardware or are do not need to worry about security on the web, there is no need to upgrade your operating system.
If cost is an issue, try Ubuntu. http://www.ubuntu.com/. This is a very good free alternative to other more popular operating systems.
As an engineer once said, "if it is not broke, don't fix it." In the case of an OS, however, how do you know if it is broke?
If the computer is very versatile and connects to any network or network of networks (ie. the Internet) then the machine should be maintained in a stable, current condition.
If the computer runs in an air-gap and security is not an issue, then do like the engineer above said and don't fis it.
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