I have an Android phone. My friend has one too, but the Android versions we have on our phones are different. I have the latest version, and my friend is disappointed that he cannot install some apps that require the latest Android update to run.
Though tech buffs are aware of the reason, the average consumer isn't. All they ask for at a showroom is an Android phone. Many are not even aware that many Android phones are not updated with the latest Android operating system. And for many, this isn't a concern at all.
The problem arises when they see a phone with a later version of Android with better functionality, and they wonder why their phone doesn't offer the same. They also don't realise that they can't update their version of Android unless the phone manufacturer releases the update for their phone. Some phones may not even get the update at all. This is because of one of two reasons. The first is that the phone's hardware must support the update, and the second is that it takes a while to adapt the new version to the modified version in the phone. One exception is the Samsung Nexus range of phones. These run the purest version of Android without any modifications, so they get the latest Android version as soon as Google releases it. Even among Nexus phones, there is a limit. For example, the first Nexus phone - Nexus One - won't get the latest Ice Cream Sandwich Android update, but the Nexus S will.
So does having the latest Android OS matter? Yes, if you like to download the latest apps and experience the latest innovations in technology. If you use your phone to make calls and send SMSes , any Android phone will do, but you won't be able to run some apps that are optimised for the latest Android OS.