I know what the purpose of the update command is, and I was just wondering if i must use it before any package installation I perform. What if I have not update for too long and install some critical packages? Also, is there any occasion that there is no need to do that?
Your copy of Ubuntu has a private copy of the list of packages that are in Ubuntu's repositories. When you install a package, apt-get reads the list and determines the URL of the package to download (which typically contains package version information).
apt-get update updates the package lists. If you don't do it before an installation, apt-get might complain that it cannot find the package in the repository, because it computed the URL based on an old version of the list (which listed an older version of the package).
Of course, apt-get update is necessary after you have changed the repositories, because the system needs to download the list for the new repositories.
It is essential before upgrading the installed packages, because the system cannot know whether the repo has a new version of a package, unless it has an up-to-date copy of the package list.
There is no reason not to run apt-get update before installing a package. However, it is not necessary, if you know that the package lists are up to date (which is after a reasonably short time since the last apt-get update)
You do not absolutly need to use the update command before you install a package, but if you don't you might end up upgrading a package just after you installed it.
Also, keep in mind that you need to update your system regularly. If you don't your computer will be at risk (you won't have the latest security patches).
If you've only just added a software repository (PPA or Debian repository), you'll have to run
When installing new software via the command line, it is a good idea to update the repository information so you don't install software only to discover that it is outdated. This is true of upgrading software as well.
If you use the graphical method of installing or upgrading software, e.g. the Ubuntu Software Center or Update Manager, respectively, these clients will automatically check for the absolute latest versions of packages.
This being said, if you're installing a batch of software and have run an update just minutes or even a few hours before, chances are you'll get the latest version. However, if you're installing the type of software that is updated frequently (such as alpha/beta or bleeding-edge software), you'll want to run an update before fetching anything from that software's repository.