I'm still running v0.1.2 for PoS mining. Do I need to update to new version? If I don't update do I risk working on a bunk blockchain or something like that (resulting in the Decred I earn not being valid on the new chain?)?
I recommend keeping up with the recent releases since there have been significant improvements since v0.1.2, e.g. since dcrd's database got upgraded, you are less likely to miss votes as a solo stake miner. The only thing to watch out for is that you will need to redownload the blockchain with versions >= v0.5.0. This process should be less than an hour on a fast system, but if that is too much downtime for you, I recommend following this guide from v0.5.1. In the next few months, the process of forced upgrades will commence once we begin voting on hard fork changes. You will need to pay closer attention to the version of your stake mining software more closely once this process begins.
Just want to add that like with most software, if you keep up with the updates, the odds of a problematic update are lower (so going from version n to n+1 is usually a pretty safe thing). As for that redownload at v0.5.1, that was a rare occurrence.