Do I need to install arc fault breakers when I upgrade a panel or service in a residential dwelling in New Jersey ?
The 2008 NEC is unclear to me on this matter.

The Code is not retroactive. If your only changing the service, and not doing any re-wiring in the home, none of the existing circuits need to be AFCI protected. The local inspector may suggest if at all possible, but he/she should not require it.

However if you are adding circuits, then yes you need AFCI protection on the new circuits.

Thank you both for the answers. This is what I thought.
Different township inspectors are giving me contradictory answers on this.
Just want to be sure to avoid any red stickers on inspections and additional
Costs for the AFCI breakers.

When I was coming up every time I asked a question like that the answer was "call the inspector". Inspectors are people, they get egos and pet peeves... and for all you know might play golf with the mayor or at least the chief inspector. I don't know if you've ever heard "you can't fight city hall", but trust me, its true. Remember, inspectors are often the ones that couldn't make it in the trade and they have the power. They may read the code different than you. Call the guy up and ask him, because if the guy the next county over or next cubicle says one thing, it doesn't matter. The guy who signs the card will be the answer. You don't want a pissing match over it, you might have the same guy again.