Ubuntu LTS is this philosophy. You install it and you are ensured support and compatibility for 3-5 years right?
No. You get regular security and general updates. These do not alter most of the basic features of the particular release. However, every six months one gets a 'upgrade' which is basically replacing your existing OS version with the newer version.
What I meant was that they could 'update' (not upgrade) the current release with the features of the newer release.
For example, updating Ubuntu 10.10 with Unity launcher which was first launched in 11.04. Similarly, adding the Aero look of Win 7 to Win XP.
Of course, they should have hardware compatibility for the same.