Speaking for myself, I would keep it, but that’s just because I tend to hoard my old hardware as a sort of personal gaming museum for sentimental reasons. Which I admit is not a stance taken by everyone.

The Switch 2 can run every Switch 1 game, so from a practical position, the old one is not truly necessary anymore. But some multiplayer games work between Switch 1 and Switch 2, so it might be worth keeping the Switch 1 if you want to play those kinds of games with others. Or even if you just want to trade Pokemon with yourself.