I'm often asked if a clients existing Joomla website can be simply 'updated' to the latest Joomla. The answer is usually far more complicated than a simple YES!
Many factors figure into if it is both feasible and economically viable to do so. Most exisitng Joomla sites have extensions, modules or plugins that have either been updated or replaced by better version since the site was built, or in some case are no longer available for the latest Joomla.
The templates used on older Joomla websites are also not compatible 'out of the box' with the latest Joomla and either require modifications or rebuilding if that style is to be maintained.
I've done many sites taking the exisitng 1.5 or 2.5 version to the latest 3.x release, and in my experience I have always found it simpler, easier and most importantly cheaper for the client to rebuild the site 'from scratch'. It gives a number of benefits, in both speed of development and the ability to use modern and up to date extensions with improved functionality. The visual style of the site can also be developed and a template designed and built to enable the site to be viewed on smartphones, tablets and desktops, with recommended on page SEO code also possible.