... If there is a real need for new or improved features, then upgrade it. If the older program is no longer supported, then upgrade it. Or, if the old version will no longer run on a newer OS, then upgrade. What is this employee's justification for 'needing' the newer version?
You have to weigh the pro's and con's of the expense against the needs. Can this individual do his/her job without the upgrade? Would upgrading provide a means of this individual doing his/her job better/quicker? Or, does this individual just want to play with the new bells and whistles?
Sure, we would all like to run the latest and greatest versions of everything we use. But, operating costs vs productivity improvements have to be taken into account. That is, unless you have an unlimited budget, in which case, of course you should upgrade it. :D