Sometimes if I'm out of time, I'll get that pop-up to update an application and ignore it for a while if I'm otherwise busy. But sometimes I'm so excited for an update, like the iPhone's 2.0 update, that I'll go to great lengths to download it. In that case, I was so eager for the App Store that I manually applied it to my phone, rather than waiting for the official go-ahead, which would have been infinitely easier (and was a semi-waste since I bought the new iPhone the next day, but it was still worth it!).
Gizmodo's got a great list of historical firmware updates that turned out to be epic failures in many cases, and an explanation of why it never hurts to wait a few days to update. This is kind of why I haven't done the iPhone 2.0.1 firmware update yet (that, or laziness).
But as for you, I want to know: Do you always update when you get prompts or when you know they're available? Or do you wait, or sometimes — gasp! — never get the update?
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I usually do, unless I hear of a bug in the update.