As a general rule, we strongly encourage users to use either the most recent beta version, or the most recent non-beta version of Google Earth. We will continue to support older versions for at least a year, and after some time, much older versions will no longer work. This is the case with Google Earth 3.0-4.0.
As for your question about why we don't let users use any version they want, let me explain a bit about how Google Earth works. Unlike a typical application, Google Earth combines both client-side (the code that lives on your computer) and server-side (stuff running on our computers in the cloud) code. These two pieces need to work together in harmony. We also are constantly evolving and improving Google Earth - both in the quality and magnitude of the data, as well as the introduction of new features like historical imagery. Evolving the product often means making changes that require changes to both the client-side and server-side code. So as we do this, it becomes difficult and sometimes impossible to support older client software. So as we design new features and improve the product, we do so in a way that allow recent versions of Google Earth to continue to work, while sunsetting older versions after a reasonable period of time (1-2 yrs.)