You are confusing upgrades and updates.

For a very clean cut example, look at vBulletin, the forum software that we run here. Jelsoft continues to release updates to the vBulletin 2.x and 3.0.x families even now that 3.5.x is out. For a board to move from 3.0 to 3.5 (as I guess we will someday) would be an upgrade. For us to patch up to 3.0.12 as we recently did, would be an update. It is essential that you run the latest updates so that you have maximum security and are not affected by bugs that have already been fixed. It is however not essential that you run the latest branch of the product, in this case 3.5 - we're still running 3.0 here.