I can't answer the buy free upgrade later but I can answer the rest of your question.
Mach1 is no longer supported so don't bother with it.
Mach2 is supported and very stable
Mach3 is in development stage with one stable version
Mach4 is a dedicated version of Mach3 that has been re-worked for use with the Gecko G-Rex, which is a high speed pulse generator and breakout board all in one package. It's slightly more complicated than that, but that is the short version.
With any purchase of Mach you get a password that will open your copy of Mach whatever. That password can be used for multiple seats of Mach on different machines. Mach comes with MachMill and Machturn but also does plasma and other things depending on how you set it up. So for your single payment to Artsoft, you get a Mill crontroller, lathe controller, plasma controller etc.
You will have to ask Art about the upgrade, but unless you need very high speed, or many i/o's you won't really need version 4.
Hope this helped.
Mike
edited to add: Lazycam is Artsoft's cam software and I think it is included in the purchase price, but again you will need to ask.
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