Eh. First of all, you're not limited to the packages your distribution supplies. Lots and lots of software is distributed in Launchpad PPAs. Other stuff can be installed without the package manager, some games are statically compiled, etc.

And I don't see what's wrong with requiring users to have an up-to-date system. Security fixes alone make regular updates almost mandatory on all operating systems. Windows installs run for a decade, but they still get constant security upgrades, including ones that require restarts and big scary service packs.

System upgrades simply should be totally painless. The kernel gets updated constantly without users noticing, it should be the same for all upgrades. Maybe a rolling release would be a better solution, because it gets rid of the scary system upgrade user interaction, but they're more difficult to QA.

Maybe the repository administration model needs to be changed. Giving the devs more control/responsibility for their package in the repository might be a good idea. Many developers already set up PPAs to get there.