If you get a unit serviced it will get the update even if you don't want it.
They have the ability to make it so that when you play some future DVD it will tell your box that it's keys are no longer valid and therefor it will no longer play your existing DVDs. Since they claim that the reason for this update is security, it's not unreasonable to expect them to do this.
They are saying that you will not be able to play new games or play on the network unless you install this update, so unless you install this update you loose your existing ability to play on the network.
remember, this isn't a 'years after the sale', this is very soon (weeks I think) after they told everyone that this capability would not be going away.