As of now, the general rule is that 3.2 is the optimal System Menu version to be using. It is the latest one with absolutely no hacks disabled. The main reason why 3.4 is avoided is that it brings along a whole array of patched IOS modules with it, as well as making the TP hack harder to use and disabling Trucha discs. Supposed automatic updates are also a concern.
However, if these issues were all eliminated, and a safe collection of patches were created, it would make the Menu 3.4 itself safe to have.
These are the primary issues keeping users away from 3.4 (Green if currently fixable; Red if not):
Trucha-signed discs are blocked.
Correct me if I'm wrong, but IOS50 (the core of 3.4) can be patched to include the bug again.
Twilight Hack is "blocked".
Not an issue with the latest Hack, but a full patch would be nice.
Loads of patched IOS modules are installed.
The assumed method of installation would be via WAD. This also solves most issues outside of the Menu itself.
Automatic Updates.
A disc update patch would be needed, along with research into whether or not the Menu itself takes control during online updates as suggested.
Right now, I'm blanking on any more issues. I'm sure there are more, but I'll leave it at that. It would be nice to see an effort to add "safety" features to this menu, particularly with the Automated Updates problem.
However, if these issues were all eliminated, and a safe collection of patches were created, it would make the Menu 3.4 itself safe to have.
These are the primary issues keeping users away from 3.4 (Green if currently fixable; Red if not):

Correct me if I'm wrong, but IOS50 (the core of 3.4) can be patched to include the bug again.

Not an issue with the latest Hack, but a full patch would be nice.

The assumed method of installation would be via WAD. This also solves most issues outside of the Menu itself.

A disc update patch would be needed, along with research into whether or not the Menu itself takes control during online updates as suggested.
Right now, I'm blanking on any more issues. I'm sure there are more, but I'll leave it at that. It would be nice to see an effort to add "safety" features to this menu, particularly with the Automated Updates problem.