I don't get why updates or later versions wouldn't count. The goal is to decide the best game ever, sometimes games get updated and improve greatly. Why not include them?
And what about upgrades like SF II Champion Edition or Ultimate Mortal Kombat 3? It's not a totally new game, but it does have a new title and different home versions. Street Fighter III 3rd Strike is often considered one of the best 2D fighters ever made. It'd be pretty lame to not be able to include it.
And what about remakes? Resident Evil for GC has the same title as the PSX version but is vastly different. What about Twin Snakes? It has a new title but is more of a port of MGS.
There's just so many questions and problems with that rule. A lot of worthy games could be overlooked.
The difference with compilations is that they're many games in one package. It makes sense to not include them.