I just make personal videos of dive trips and so on but just curious when the need in a software upgrade becomes evident?
The answer is when you feel you have outgrown it or are limited. (Not trying to be flippant in that remark at all, when you look at what you make and start saying more and more "I wish I can do this" the chances are there is something that can help reach that goal, but you can go a long way starting with basic/less expensive packages.) Not sure if you are on a Mac or PC, but on the Mac side of things there are the iLife Apps, iMovie, iDVD, iPhoto etc. They are all powerful little applications that can do alot, and more features have been added to each one to help with work flow and what you can accomplish. I have the Final Cut Studio and all the Adobe software, but the little apps are still impressive in their own right. I have put edits and movies together using iMovie. For personal things they can be more than fine. But at some point wanting to get further into color corrections/more control, more special effects/compositing, perhaps an easier workflow and more options the other software may become more appealing. Keep in mind though that a critical part is getting good footage to begin with, requires less work in post.
It will be similar to when you move from a P&S to a dSLR or a newer video rig or faster computer when what you envision is being slowed down, or not possible (or possible with more effort) that switching over makes sense. Some things may require more expensive software (some codecs, RED footage, dSLR and so forth). Which camera are you shooting and on what system are you editing?