I started using Joomla when version 1.5 was released way back in 2008. I had a mix of work that took in the previous version, 1.0 and the newer version, 1.5.
There was never an easy upgrade path between the two.
There were components to do it but is was a very messy affair due the the huge differences between the old system and the new system.
Now in 2013 we are in a very similar situation. The upgrade path between 1.5 and the new 2.5 is a massive transition as many key parts of the operating system and how it handles templates have been rewritten so we are happy to report that it can be made fairly painless by using the JUpgrade component.
I am not saying this is not a lot of work, it is, especially with complex websites which have a lot of components which each need to be checked as 2.5 compatible otherwise alternatives sourced.
The good news looking on is all Joomla upgrades will be able to be completed by a push of a button in the admin dashboard. No more complex upgrade paths and the only things that have to be taken into consideration is that components, modules and plugins are compatible with the newer versions.
Most developers are using Joomla 2.5 for new websites but we get a lot of enquiries about legacy 1.5 websites and whether the client should upgrade to Joomla 2.5 which is stable, go to 3.0 which is in a beta stage or wait for the 3.5 release candidate later this year. The developers of the 3.0 version are only offering short term support but are offering long term support on version 3.5.
We would advise to move up to Joomla 2.5 immediately. Joomla 1.5 has not been supported since the middle of last year which means you will not be getting security updates. Moving straight to 3.0 risks your components not working and the obvious risks of using a beta version.
The bulk of your cost is going to be transitioning from 1.5 to 2.5 and the move from 2.5 to 3.5 and onwards is going to be minimal providing the components you are using have caught up.
Staying with 1.5 until 3.5 is released is a massive risk due to the fact that by the time it is released, you will be nearly two years behind on your security updates and at a high risk of attack by hackers. It is very, very important for you to be off of 1.5 as soon as possible. I'm seeing and hearing of 1.5 sites being hacked on a weekly basis and the cost of getting these sites cleaned up is sometimes more than upgrading the website in the first place.
If you do plan on using 1.5 until 3.5 is released please make sure that you take a regular back up and download the backup it to your hard drive. An easy to use free back up component such as Akeeba Backup is your friend here. If the worst comes to the the worst, a web developer can restore it to how it was before the hack and secure it the best they can.
Still confused about Joomla version? Below is a graphic which illustrates Joomla's release cycle.