Nginx is one of those rare products where I felt no need to upgrade from the now-ancient 0.7.6 version because it just does everything I need well. Truly an amazing little piece of code, on par (in my books) with venerable oldies like qmail.
It's worth keeping an eye on the current development version goes stable. 1.1.4[1] introduced preliminary HTTP/1.1 reverse proxying which means persistent connections to the backend and thus less overhead.
That is also true. You can use that version for as long as you want! The company I work for uses a newer stable version of nginx in production, but I think I actually make use of a directive that was introduced after the 0.7 series. Even so, as a small company with only a few customers, we're okay sticking a little closer to the edge. At this point, there's no compelling reason for us to upgrade past where we are (I think 0.98) unless I want bug fixes for things bugs we haven't seen.
I almost agree, i.e. second-level-legacy 0.7.x line is good enough for most of web needs, so indeed there is no really strong urge to upgrade to the current stable, though some nice features came later. What I do not agree is keeping really old 0.7.6 instead of upgrading to safer and more stable 0.7.6y (and if you do, going to the latest 0.7.69 is obviously the best solution).
Upgrading to at least the latest minor version (0.7.6y as you say) may indeed be a good idea since there have been some security vulnerabilities discovered e.g.
