Why is updating your anti-virus a good thing?

Antivirus vendors play a 'cat and mouse' game with malware creators. As malware is discovered definitions are written to discover the program and other programs written in a similar way. If an existing piece of malware is extensively rewritten or a new piece of malware is created, the existing malware definitions are unlikely to detect the program as malicious. This means that antivirus vendors have to find a 'sample' of the new malware being used and create a new definition for it. When you update your anti-virus these malware definitions are downloaded allowing your antivirus to detect this newer malware and keeps your computer secure from these newer threats.