All good advice.

As a developer I do things a little differently - I always have a mirror of my site running on my development machine - this is very easy to achieve using something like WAMP / MAMP / LAMP - These are Apache server packages that allow you to run your website on your local computer - Just like your web server. This way you can make mods or test and change - all without affecting your live site. (it's a great way to learn web coding without screwing things up too)

I simply make see more a copy of the site and database on my dev machine and apply the mod / update / etc to this - this way if there is an issue I can always revert to the original version. Having this on your local machine means that it only takes seconds to copy or zip the whole site directory structure - whereas it could take hours to download a copy from your server via FTP, a real PITA as most will attest.

For all of my sites I also keep a journal detailing all of the mods I apply - much like a set of instructions that you would get with mods here in the marketplace, this way I can manually replicate everything should the need arise, it's also quick to search through when trying to review mods at a later date. It also means that i have a copy of the changed code too.

So in effect - I have a complete local copy of the site - which I make a copy of, that is used for testing. If this is successful, I then repeat the mod / update / etc on the live site.

Many ways of skinning a cat - this is just mine.

As for the other question of - whether to update or not? It seems pretty stable to me, but then I have only attempted this on a stock install, others have had various issues whilst using non-stick templates and mods - hopefully most of the bugs have now come to light - most are easy fixes, so your mileage may vary depending on how modded your site is. Personally I would go ahead with testing it on a copy of your site, but hold off updating your live site until you are 100% happy.

HTH

/DM