Well is it? I use 3.5 and it works fine. I tried 4.2 and saw no noticeable difference except neater looking icons and the loss of the ability to have different wallpapers on different desktops.

Has 4.3 caught up with 3.5 yet, or must I wait for 4.4, 5, 6, ... ?

Is a banana as powerful as an apple? No, because they're two different things.

On a more serious note - from the release announcement, you can read:

The KDE community has fixed over 10,000 bugs and implemented almost 2,000 feature requests in the last 6 months.

New features that KDE3 users might be interested in include:
- Activities can now be tied to virtual desktops (i.e., different wallpapers (and widgets) on different desktops)
- Peek into a folder by hovering it in Folderview
- Previews of files within a folder in Dolphin
- Treeview (optional) in System Settings

Of course there are features and applications missing from KDE3, but on the other hand there are a lot of new features too. I would suggest you to give KDE 4.3 a try and see if you like it.

I would say that KDE 4.2 was far more powerful then KDE 3.5.

"no noticeable difference except neater looking icons and the loss of the ability to have different wallpapers on different desktops." What, have you been asleep all this time? Have you even TRIED to look for the new stuff?

Perhaps someone should take some time and do an in-depth and exhaustive as possible comparison of 3.5 vs. 4.(2 or 3), and publish on the web so that everyone can go and see where we stand.
I do agree that comparing the two is similar to comparing apples to bananas (or either KDE version to Gnome). While there certainly are some things that KDE 3.5 did better, or had which are not available in 4.x (at this point it's primarily apps which are taking their time to reach stable maturity or have been left behind in the 3.5 world); there are many things which KDE 4 does or provides which KDE 3.5 could never do (well).

You are the only one who can find out because what might be good for one person might not be good enough for another.

If you don't want to hose your setup, try out a LiveCD:
http://home.kde.org/~binner/kde-four-live/
You can run it in VirtualBox or burn it if you'd like.