It depends highly on your customers, as always: Invest as much as needed.
I have customers which run on CE 1.3, 1.4, 1.5, 1.7, 1.8 and we just upgraded a few to 1.9.
There were big breaks between 1.5/1.6 introducing flat tables, change order, etc. to flat and changing mysql4 to resource.
In 1.8.1 form keys were introduced.
So if you have a defined customer set, ask them, which version they run and orient yourself on this. If you don't know I would recommend to target for 1.6, implement TESTs(!!) to easily check, whether your extension runs in all the versions and if needed, backport it later to 1.5 or earlier.
I think beside the problem, that you have a ancient magento version, a lot of shops are customized, so here you will get new problems.