automatic updates are beneficial for me. mga 3 times na bumagal ang laptop ko coz of so many spywares/malwares but after an auto-update from M$ back to normal sya. I use a genuine copy bundled with my laptop.
but one thing I observed. this is not true with a non-branded desktop with a bootlegged copy of XP. my wife uses a Shuttle XPC barebone unit with GFX video. I installed 1GB of RAM for her, pero everytime nag-uupdate ng Windows nya, pabagal ng pabagal yun PC to the point na kelangan ng mag-reinstall. in fact, mas mabilis pa in the long run yun laptop with only 512MB and a not so powerful ATI video card.
so I'm guessing automatic updates really work if you use an orig XP with a branded PC.