Is the PSVR worth picking up now or shall I hang on for the PS5 to come out and wait and see if they release a newer version?
Well worth it. And if you haven't experienced anything in VR before and are on the fence about it, the first time you try something like the Shark demo on the VR Worlds, or the Playroom, it'll immediately make you realise you've made a good decision in buying one. As has been said, there is now a fairly decent enough library of games to keep you occupied. Even if a lot of them are short lived, the prices on a lot of them are low enough that you'll get more than your money's worth. Games like Shooty Fruity are shooting gallery games that are basically like going to an arcade or a funfair and paying to get on a ride or attraction. That's literally the best way I can describe it, because it puts you there and you've to physically move and interact.
It's pointless to wait, because we just don't know when, or if, Sony will make a PSVR 2, although early signs are that they will. It's just a case of when they think it'll be ready, because as it is, this version of VR is only the first generation, so it's essentially the Intellivision generation of VR. Other companies are working hard on improving the tech, like opening up the FOV to get it closer to human sight, screen tech to mitigate motion sickness and focal range to simulate how your eyes work, better tracking etc. Just recently a company called Pimax released what is said to be regarded as the first 2nd gen headset, and it has an FOV of around 200 degrees, which is nearly double that of the likes of PSVR, and has a max of 4k per eye, as opposed to PSVR's meagre 1080 single panel split over two eyes. All these improvement you'd expect in PSVR 2 and maybe even better or more, but it comes with a cost. It could be about 2 years or more before we see PS5 and PSVR2, and by then costs and improved technologies for VR in general will have improved.
Another thing, the library for PSVR is continually improving and building, and it's said there are at least 200+ more games in development for it, so no worries about it not being supported. Firewall Zero Hour recently released for it, and it's basically Rainbow 6 with 4 man squads online.
This is a good video backing up what I'm saying:
https://www.youtube.com/v/OKqs3eNzAuY