The only time you need to do a major upgrade when your processor is too slow or you want to get video / sound cards that your motherboard does not support.
However, you never really have to change
all of the hardware.
Most hardware you can port from computer to computer without replacing it -- mice, keyboards, hard drives, CD / DVD drives, network cards, and (depending on motherboard compatibility) memory modules.
So, if you need a faster and more powerful computer, simply buy a new computer case (with more powerful power suppy) and install a newer motherboard and processor.
Once the basic hardware is together (motherboards and cases come with easy instructions), just put all the other hardware you canabalized from your old computer into it, along with anything you want to update (like newer video and sound cards, a DVD+RW, more memory, etc).