For general purpose photography for a general purpose casual user there probably isn't much reason to upgrade your general purpose lens. For everyday photos you'll be printing out on your printer or at the local lab/supermarket to 6x4or A4 etc to show friends and family I doubt you'll notice much of the quality difference between this lens and the more expensive ones. The only gripe you may have is wanting a shallower depth of field on people shots, or wanting a lower ISO when shooting in low light.
It's when you start wanting to view or print your pictures bigger than a screen/A4 that you may be wanting a better lens. When you start looking more closely at the pixels you'll notice some fringing/chromatic aberration around subjects. You can help minimise this by closing down the aperture but then that makes the lens less useful in certain lighting conditions.
Also if you're doing some action shots you may want a lens with a quicker autofocus, or a quieter one for nature photos. You might want a slightly more robust lens if you're planning on hiking places and worried it might get knocked or dropped, or weather sealed if you'll be out in the rain.
So as a general purpose lens it's great, but if you start noticing it's limitations in the kind of photos you want to be taking then that's when you realise you 'need' to be using a more expensive lens. If you don't notice any of these things in the photos you're taking, then there is probably little point in upgrading, and as more and more casual users are investing in DSLR's these days more and more people are going to be finding the kit 18-55mm lens more than adequate for their needs.