I have SP1, but I don't have SP2 on MY computer. My girlfriend's computer (the one im on right now) has both SP1 and SP2 and she hasn't had a single problem with a virus, compatibility issues, or anything. I guess that isn't saying much since it's a laptop and she only uses it for school (internet explorer, winamp/WMP for music and DVDs).
You might as well update and just re-install anything or fix anything that breaks.. it will do you more good in the end, and after all the drama with SP2, i'm sure microsoft will think twice before releasing anything that destroys all compatibility with anything.
If it really matters that much, switch to linux. I use linux most of the time on MY computer simply because it's.. well, more simple.