I agree. Switch immediately if you're just learning or playing around with Django. Most likely, the biggest change in casual development will be the class-based generic views, which I think are an improvement over the previous function-based generic views.
If there's no conflicting code changes compared to what you've already written, upgrade away!
If there are changes needed to support the new version you'll have to weigh the time needed to implement the changes to the new features/improvements in the new version; is it worth it? Only you can make that decision.
You may want to take a look at Pinax to get a HUGE head start on a django-based web app. (http://pinaxproject.com )
And since installing Pinax auto-installs django 1.2 (currently), you may want to stick with that.
But if you aren't using Pinax, move forward to 1.3 if you are new.
I'm using Pinax, and I'll use the version that they auto-install with their product (which was 1.2 when I installed on a new machine yesterday). I can't wait until Pinax ships 1.3! looks cool!
I was using Pinax, but I just moved my apps over to a vanilla 1.3 install.
Pinax has some cool stuff, but I gotta be honest, I found it a little tough on a newbie. Maybe I just choose poorly on my starter project, but it took me a while to understand how Pinax uses templates and how the media handling works. And it turns out that I'm actually rather particular about my templates and how I want my tagging to work. It also wasn't always clear how Pinax deviates from a regular install, so it made just that much harder to ask for help or reference other tutorials.
When Pinax comes out for 1.3 I'll definitely take another look. I certainly don't intend to build my own account creation & verification & user profile app, when it's got what looks like a very nice one.
That was the case until 1.0, but I don't think that's really the case since the 1.0 release, let alone later ones. That may have taken off again due to the 1.3 delays, but that's not a trend.
Point releases are supported, with clear changelogs and migration paths and available from pypi. They're really much easier to work with than trunk.
No, switch now. If only for the new 'render()' shortcut.
For what it's worth, I've upgraded a couple of 1.2 projects to 1.3 and it hasn't caused any problems. That's anecdotal, and I don't know what, if anything, is supposed to break, but if it's a baby project, better to switch before it gets too big.