I would just replace the chain, chances are you will be OK but if it ends up skipping badly then you know you need to replace the cassette and possibly the chainrings although the chainrings are probably still fine. Next time ideally you should replace the chain at 1/16in wear as stated above though.

No need to upgrade unless you just really want to but realistically the difference in shift quality between XT stuff and what you currently have is not huge, I have a deore level cassette on my commuter and a 990 sram and I can not tell much difference at all.