I live in a four bedroom colonial. The Pacific Electrical Panel is 125amps and 29 circuit breakers of which 3 are not in use. Is it necessary to upgrade the system to 200 amps? I have no problems with it and is seldom overloaded. If I choose to upgrade the panel what is the cost of such a project.

When you say it is seldom overloaded, do you mean the main breaker is overloaded and tripping? Or individual circuits?

It's not necessary to upgrade unless there is a need for it, like if you are doing some adding on to your house or adding a hottub or a garage with some welding equipment and the service you have is not enough. If you don't plan on adding anything, your 125 amps should be fine.

If you do decide to upgrade the price can range from $1000 to $1500. Get a few quotes from reputable contractors in your area.

If your 125 Amp trips, 200 Amp not a bad option.
200 Amp disconnect, and breaker,
2" conduit from disconnect to panel.
2-2/0 wire for Hots.
1=1/0 wire for neutral
1-#4 for ground
40 circuit Panel, Main Lug
Breakers
Prices vary in areas, take list to local supplier and length of Wire and PVC needed

Should you decide to ask contractors for an estimate, ask that they do the service calculations to determine if a larger service is needed, and what size service would be required.

While you may need to pay a service call charge for the calcs to be done, a small investment to be sure your service is sized properly, rather than guessing.