We went by weight and length. DD is 17lbs and 26 inches. She looked so uncomfortable in the infant carrier, so we got out the convertible seat. She is much happier now.
For my infant seat (Graco Snugride), the limit is 22lbs and 29". My DS is 18.6lbs and gaining fast, so I just bought him a convertable carseat yesterday.
Re: when do you get a new carseat?