I update both my C5 and C7 as soon as possible of a release. That is often within a few minutes to within an hour at most. (I subscribe to the release notes category on this forum so I know when things go live.) I am also a Beta tester, so I get quite a few of those "work in progress" updates too.
In exactly zero instances have I "lost functionality", or had an update be "detrimental", or crashed the hub. Yes there is occasionally a bug or two, but I have never had anything so bad it made me want to stay with the older version or roll back to a previous version.
I understand the idea of waiting a week or a couple minor releases before doing the update, that might be a good idea for some users.
Those of you sticking with older updates can feel free to not update, but you are missing out on some genuinely awesome improvements to the hub. There have been many bugfixes and nifty feature updates especially in the last few updates. The last 2-3 releases have made the hub better than it ever was for smoothness, memory use, and in usability. There have been tweaks to items like the new "add a device" and settings menus that are much easier to use than before. Things like being able to clone any app are terrific additions to the hub. Predicate conditions on rules are fantastic.
Anyway, do what you feel is right for you, but I don't see any reason to not update at some point.