As above, if the casing/cords are starting to show though, the tire is finished. A bulge in the tire also usually indicates damaged tire casing and it should be replaced. Also if you notice increased frequency of punctures, your tire has likely thinned enough that it should be replaced.
Also as above, if replacing with similar sized tires (not changing from 40mm width to 28mm width, for instance), general orthodoxy is to replace the worn rear tire with the much less worm front tire, and put a new tire on the front. The logic behind this is that a more worn tire is likely more prone to punctures, and punctures on the front tire often have the potential to be more catastrophic than punctures on the rear.
If you are making a big change in tire size then I think you should change both at the same time.