Stage 1 and Stage 2 are totally different things.
Stage 1 upgrades are all bolt on.... new pipes, air cleaner, new ignition and module, and maybe new plugs/wires. No need to open the engine.
Stage 2 upgrades involve going into the engine.... new cam, milling of the heads...etc.
Going to stage 2, you better already have stage 1 done first (getting rid of those stock pipes is the FIRST thing you should do!). But certainly you can go "straight" to a stage 2, it's just gonna be more expensive cuz you gotta do the same stuff done in the stage 1 upgrade, plus the engine internals for stage 2.
That's why they call it "stages". Instead of just dumping thousands in at once, you can do it over time and get increased horsepower gradually... sort of like getting a new bike more than once!
This "stage" stuff is explained in many places, but one of the best is:
http://www.nightrider.com/biketech/index.htm