Sure what? Please explain why everybody is caught in this trap that they think they need to upgrade?
I'll respond seriously to a question that's probably less than serious.
First, I don't "need" a smartphone, and I don't "need" a cell phone, depending on your definition of need. But, sure, I can justify upgrading. I have a 3G on iOs 4.x. Opening up larger apps can take several tries before it stops crashing. Tap....wait....crash. Tap...wait...crash. Repeat four or five times, at about 10-15 seconds per wait.
Even when it doesn't crash at startup (or during use, which is common), it's just plain slow. Keyboard input can take 10 seconds to respond to input. Tapping can not show anything for that long. I use my phone to record notes all the time, and that's too slow to use for that. Not to mention photographs. By the time my camera app is ready my kids have left for college (This is an exaggeration. Mostly.).
And speaking of photographs and kids, there's all these neat things that aren't on the 3G like a way better camera, video capture, and Facetime. Being able to capture more and better quality memories is nice.
Oh, yeah--the back has cracks, and the front has scratches, too. One of our two phones doesn't work on wifi anymore.
TL;DR: A newer model will be able to do the things I want to do faster, and do more things that I can't do. Not all that different, really, than other phones, technology, or tools.
P.S.: I've never been one who cares about having the newest phone--you know the type. Some people get mad if, say, Apple were to release a new phone 2 months after the last one because they don't have the latest and greatest. After struggling with the 3G for so long, I really want to have "the newest phone"--not for the status--but simply because that I'll have a usable phone for that much longer.