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Computer Compatibility
The one area where incompatibility is a reality is in computers. Computer manufacturers and software developers build computers to be incompatible. Maybe not always intentionally but they often have no intention of designing a system to be compatible with nothing but the latest.
Playing off of my last two entries lets look at the browser war. Internet Explorers' competition has built features into their browsers that IE is just now getting around to including in IE 7. The only thing is IE7 requires XP while the others don't.
Having done a lot of programming I know that software can very often be written to take advantage of the features of a new operating system or hardware configuration without requiring them. A little more effort may be involved but it's very possible. However it is becoming more prevalent for developers to limit their code to a single operating system or version. I suspect much of the development is done based on arrangements with those OS developers.
For example much of open source software supports multiple versions and operating systems while commercial software is targeted to the latest OS versions at the time. Think about the irony in that.
Not only is it common to code for a particular OS but now more developers are developing to isolated file formats and refusing to make their programs downward compatible. Much of the software upgrades now are done in order to be compatible with newer file formats not because of some new features. It's the software equivalent of planned obsolescence. And then to make it even more of a necessity some applications like QuarkXPress and InDesign won't read a file that's more than a couple versions back.
My philosophy in this area has been to hang on as long as possible. It wasn't until some of the software I was going to use required XP last year that I got it. Though I have Office 2003 installed and will be getting 2007 next week I'm still using Office 2000 applications.
I'm not saying you should never upgrade or that everything should always be compatible but do look before you buy and be aware of the restrictive nature of what package you are considering. You might be able to open the latest and greatest with your new version but consider that your upgrade may force those you share files with to upgrade.