Tom McFarlin wrote a great post on software version numbers. If you put version numbers in anything then it’s a good read.
I admit to agonizing over plugin version numbers. See I build a bunch of custom plugins for clients to extend their WordPress installation and all the plugins get a version number. I even increase it when we make some changes, and they get a changelog.txt file tracking all the changes we make.
Really my clients don’t care though and I’m only updating it for them. If it works, it never gets upgraded, if it has an issue we patch and I bump the version number. The number really doesn’t matter though.
Now for publicly released plugins, the number does matter but not to users. The number matters so that upgrades can be automatic from older versions. I suppose they also matter in the context of support. Knowing someone is on 1.0 vs 1.2 could mean a big difference in what you need to do for troubleshooting.
I don’t see version numbers going away anytime soon, but I’m going to stop worrying about them for client work. Just bump the number and let it be.