This is a little hilarious, but it is true. I never updated my XP after installing, mostly because an updated XP would occupy more space in time and start being slow and become generally unusable. I tried to get a copy of XP with the latest patches slipped in, eventually an original copy from Microsoft. But I am regularly updating my Windows 7, after checking if the update is safe to install. So far I didn't see anything suspicious with my Windows 7. Some applications (mainly games) still crash it, but it is not Microsoft's fault, at least not entirely. Good to see though that we are encouraged to have safer computers.
Don't think WGA notification is a punishment, ir's rather a help for probable victims, lol. Definitely here's the moment of thuth: "Microsoft: We like to work with customers who have non-genuine copies of Windows... We will continue this path of constructive engagement with our customers." They do calculate all possible profits and costs and keep piracy on the level they consider the best.