The last time I updated, sites would load extremely slowly, and the visual tabs - which are the reason I use Opera - were gigantic. Did I do something wrong?
You could have malware in your computer causing the slowdown issue. About the visual tabs I'm not sure, since they're not yet available in Opera 23.0 (the stable version) but you can have tab thumbnails on hover in Opera 24 beta and newer (the previews are bigger but it also makes them more useful IMO).
And why do I need to update?
The latest version will keep old bugs far from you. Opera 23+ has better performance (if you have a fair hardware) and better compatibility with webpages.
Right now it lacks some features like Opera Link and a classic advanced way of dealing with bookmarks - but these are coming back hopefully soon with some advancements in Opera 25 beta/alpha. But you might want to get accustomed to the idea of upgrading to newer Opera versions or another browser of your preference because in the future you'll also be left with no security fixes for Opera 12.x and no compatibility nor bug-fixing updates either (it could not work at all in newer operating system releases like Windows 9 for instance).