Well the frequency of updating your phone is entirely dependent on you.

You even need not update the major update from GB to ICS unless you want to, and more importantly unless you want to reap the benefits.

I personally am a flashing/update freak, I keep updating to the latest stable version as and when I can.

Basically it's a universal recommendation to update to the major releases like GB -> ICS -> JellyBean (rumoured) [side note JB is a long time away]
Some of the minor updates are just minor tweaks but some of them actually fix many bugs and fix security loopholes all the while improving performance.

Even on the same version, such as 4.0.3, you have many firmware versions being released, such as LPQ, LPS, LP7, LP8. Even if you do not progressively update these versions you should definitely update when a new version like 4.0.4 or 4.0.5 is released OFFICIALLY.

This is just a short explanation, hope it helps. If you wish for a more detailed explanation of versions and updates feel free to ask, I'll post in detail overnight (it will be a long long post )

 

it depends on what kind of smartphone user are you.

 

that's true, but my recommendation is that whenever an update like 4.0.3 -> 4.0.4 -> 4.0.5 comes you should update. It necessarily means that google has come up with some fix or update to the core android SDK.

Whereas when sammy keeps coming up with updates like LPQ -> LPS -> LP7 those are updates by Sammy and their tinkering. Those might be fixes by sammy but the android core is the same. So it's more of an optional update if you are already on a stable firmware.

 

Well the 4.0.4 update is rumored to have better battery performance than before

 

The only updates I would term "necessary" are those offered by the manufacturer/carrier, as there's usually a reason such as fixing bugs, optimising settings etc.

 

I'm with Forbidden 403...I HAVE to have the newest version of everything!

Also, I think you'll be missing out on new apps, as they will start to be targeted towards ICS users, with less support for GB.

 

In that case check the build date carefully. A higher version number doesn't necessarily mean "newest".

That's highly unlikely.