Till now I can not say I have ever seen a performance improvement or infact, any significant changes after installing Windows Updates. So my question is, how necessary is the updates for a Home user? I know Service Packs have relevant updates for certain applications propriety to Microsoft, but that is not pointed out. I would just like to know if it is really necessary and what the chances are for your system to be slowed down by the updates.
The main focus of Windows updates tends to be security patches, as opposed to speed enhancements. The reason you have not seen any "significant changes" is because the updates are patching very specific circumstances, which may lead to system vulnerability. A full explanation of the reason and workings of each update is given in the Windows Update window.
In my opinion, you should download and install all updates, since there will be good reason for Microsoft to be distributing them.
Does Windows 7 Updates really improve your system performance?
No, definitely not, but nevertheless you should install ALL of them :)
Take a look at this answer please: Which of the Windows updates are really necessary?
Most updates fix security issues, but there are some Performance updates. MS bundled 90 updates in an Enterprise Hotfix Rollup which also helps home users because they include fixes for faster booting:
KB2510636 - An update that improves the startup performance of Windows 7 and of Windows Server 2008 R2 is available
KB2555428 - The Windows 7 startup process is slow when you create many restore points
KB2505454 - The startup process is delayed on a computer that has a large hard disk installed and is running Windows 7 or Windows Server 2008 R2
I however don't recommand install all updates. Installing updates increases the size of C:\Windows\winsxs. The size easily goes to 10G. You will use up your disk soon.
The disk usage of installing Windows without Service Pack and then installing Service Pack is larger than installing Windows with SP, because Windows will backup files changed by the sp. There is a tool that can make sp permanent by removing the backup files and you cannot uninstall the sp, after which the disk usage should be same as installing Windows with sp.
If you installed AntiVirus software, you face lower security vulnerability. If you don't have AntiVirus software, like me, and rely on UAC to protect your system, don't let malware bypass UAC by exploiting security vulnerability.
I don't install antivirus software, nor install windows updates for four years and I am not infected by virus. You may become a computer expert to take the risk and win benefit.