An alarm system is like any other appliance or device. It's designed to operate for a number of years with minimum maintenance while providing a usually trouble-free service. Most systems are designed to last a minimum of 10 years, with longer being common lifespan. Like anything, they come up to be upgraded or replaced. It's like the old color TV you have that kinda works, it has a greenish screen tint, the sound isn't that great, and the remote doesn't have a sleep timer or "favorites" button. Sure, it may be serviceable for a few more years, but eventually it'll fail, usually when your favorite marathon of The Brady Bunch is on.
Generally, for the end users, updating is beneficial if you have an old (10-15+) year old installation, with very few "zones" but a lot of devices. Partial rewiring and separating devices out would be beneficial, as well as adding new hardware. Replacing motions, glass breaks or other burglary devices should strongly be considered. Contact switches, if not of the sealed reed type, should be replaced. Fire devices should be replaced at this age, regardless of functionality or maintenance. Wiring issues should be addressed, including verification with a meter, correction of any damage and rerouting as necessary. Electrical tape and twisting is not a good way to have system longevity.
Keep in mind; a system of this "vintage" has usually been out of production for some time, and service "spares" are usually dwindling in supplies. You may find that you can replace a single component, such as a keypad, with a newer unit and keep the system intact, but that's usually an exception.
Upgrading usually comes into play when an end user desires new features or would like to streamline the operation of an existing system, or systems. Examples of this are: Replacing multiple control sets on a property with a partionable system, installing wireless devices, or adding more functionality to the system, such as user codes or user interface devices such as keypads, touch screens, or access control. It may also include "breaking up" combined devices into more zones by installing more or different hardware, wiring allowing. You may simply have exceeded your system's current capabilities and need to upgrade from a basic panel to a larger brother. Sometimes upgrading is simply done because the prior unit didn't support a desired hardware, such as an alpha keypad or integrated backup communicator. Usually upgrading doesn't involve replacing much more than a control set and the peripherals connected to it. Burglar and fire devices usually aren't replaced unless another feature is desired or the units are found to be faulty or malfunctioning.
A good timeframe to consider an upgrade is around the 5-7 year mark, depending on the manufacturer and panel you installed originally.
Keep in mind, the amount of hardware, such as motions and fire devices, you're going to end up replacing are in direct proportion to the amount of maintenance and upkeep you have done to your system. A simple seasonal vacuum or use of canned air (duster) will go a long way. Replacing the battery is also part of the routine, with 3-5 years the recommended interval.
Generally, unless you're looking at a huge rat's nest of wiring and your original installer did a halfway neat job, swapping out the hardware, addressing issues, programming and testing, an upgrade can be done easily on a weekend, with time to spare, with a minimal amount of tools.