My CoreData model currently uses old (Xcode 3.2) format. I'd like to increase it to the latest one available, in which data is represented in the XML form:
Should I also increase the Model Version Number in the Core Data editor?
I cannot think of any reason why you'd need to do that as Model Version and Tools Version should be unrelated and orthogonal.
I have a 10-year old Mac app, Core Data document, which I've always built with the latest Xcode but I never bothered to change the Tools Version in its one data model, which contains 28 entities and a lot of relationships. Until 30 minutes ago, its Tools Version was Xcode 3.2, like yours. To prove my point, I changed only the Tools Version, to Automatic (Xcode 9.0), did a Clean Build Folder, then test, build and run. It passed my test suite, launched fine, opens documents, saves changes. No trouble found. Everything works fine. I plan to commit this change and ship my next version with it.