Do I need to upgrade to be able to use plugins? (I'm new to wordpress)
No, But If you're talking about a site on wordpress.com...then yes. Once you move to a self hosted WP install you'll be able to do anything you want with it. bigger learning curve, but total flexibility.
A good free resource (PDF to download) to help you understand what WP is all about is at http://easywpguide.com/