Software updates - What a sticky topic! Do you pay? Are they free? How frequently should you install them? Should they be installed automatically? In some cases you find yourself vulnerable to exploits by not upgrading. In this case, you might "brick" your home router. Yes, we're talking about Windows XP Service Pack 3. Changes to the network stack manage to send Billion "BiPAC 5200-series routers to go into a constant crash and reboot cycle".
Here's my take. In general, it's good practice to stay updated. I'd hold off on critical systems, especially in closed environments (not on the Internet). For those cases you might consider a policy of first upgrading a test environment. At the very least, schedule upgrades during times that will minimize downtime impact. And - have a backup!
http://apcmag.com/router_crashes_blamed_on_windows_xp_sp3.htm
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