Your question was more than reasonable! I had read of a lot of folks with 1st Gen shuffles that were not functional, becoming functional, not sure if this was a iTunes update or a special program they released for 1st Gen shuffles.
My personal experience has been no problems with any of the firmware updates, and the only "problem" I have experienced is sluggish performance of iTunes v 7.0 when it first came out. It was still functional albeit a bit slow!!! Again my personal preference is to keep all my hardware and software as up to date as possible. After all, there are version releases for a reason!