When should one update?
The short answer is Now!
Not now as in update-right-before-delivery but now-since-we-will-update-anyway-someday.
Take this example: You have a web site running on dotnet2. You know that dotnet has updated not one but two steps since then. You also know of goodies like Linq. If you google for dotnet2->4 problems you will not see many.
So what is keeping you?
Every day you don’t update you will build on your technical debt. Since you didn’t upgrade 2->3.5 two years ago 1)the debt is greater and 2)the update is bigger.
Smart move? No.