Im using 4.0e, full compatibility, everything the same as I had it on 3.4, everything working, including cioscorp (wii and gamecube backups from disk channel).
since I use the SD card menu, Im really glad I updated. If youre never ever going to use that and dont want to use newer VC stuff/Wiiwares, nevermind updating. If you feel you havent got enough wii blocks, using the sd card menu may help.