Mine is 4.1U and it never needed any updates or caused any troubles, honestly there's absolutely no reason to update your formware more than 4.1
You can have one as 8 MB or even smaller, I set the Japanese one for 8 MB and Donkey Konga (among the other Jap games) work fine, the game has issues with 16 MB though!
Cyan I was wondering, is it possible to make an option in USB Loader GX to choose which multi save file you wanna use? making the default as "ninmem.raw" while we get to choose another one for certain games that crash with 16 MB, like I can make a file named "ninmemB.raw" for 2 disc games or any others that have issues, maybe this way we can have two memory cards one for slot A and one for slot B for games like the Chao garden!
Edit 2: here's what I mean, like an option per game to set the path for the "multi MC" something like this:
Default:
Slot A: USB:/Saves/ninmem.raw
Slot B: USB:/Saves/ninmemB.raw
Where Slot B is activated and ready to use, slot A is 16 MB and slot B is 8 MB, with this you can set broken games like swap disc like this:
Slot A: USB:/Saves/ninmemB.raw
Slot B: None
This way you can use for the Chao garden as well as the other stuff!