Since 1.8 is an LTS release, those of you using 1.4 can finally upgrade without having to do so again for a couple years.
On a side note, it is also a good time to try out Python 3, as most packages now support both 2 and 3.
Python 3 is wonderful to work with now, compared to just a year ago. Django's support for Python 3 really helped speed up the ultra-slow process of getting many of the popular libraries to support it. IOW, now is a great time to start using Python 3 for new projects.
Since 1.7 introduced migrations, I recommend upgrading to 1.6 first and getting your South migrations caught up with third party apps. Some may have data and schema migrations e.g. django-photologue. Then jump to 1.7 or 1.8.
You'll likely have to update your requirements.txt with the latest packages, so you'll want to see if they're compatible with the version you're upgrading to.
I recommend keeping it up-to-date with every release if possible. Much easier to make incremental updates than spend months on upgrading 4 major versions.
And read ALL the release notes.
Do try out migrations in 1.8, btw. When Andrew Godwin migrated them into Django, a lot of things were changed, and now migrations are truly great to work with.