It depends how you're installing it. If you want to distribute it to other people, you should update the version number, which will let tools like pip
correctly upgrade the package.
Additionally, if you're not the original author of the package and you're thinking about forking the project and distributing it, it's usually best to change the package name (even if you are going to keep the same namespace and import names). See PIL and pillow as an example of this.
If you're just doing it for testing, you can run the setup.py
script manually and it should reinstall the package regardless of the version number.
python setup.py install
If you want to make continuous changes to the package for development without having to reinstall it each time, you can install the package so that it runs from your development location.
python setup.py develop