Personally I like to have files for all the Service Packs, especially since we have more than the one PC and every now and again one might get reinstalled. I also fix other peeps PCs occassionally so I find the files useful to have.
Also after a reinstall and service packs I go on microsoft update and download all the updates (bar those I don't want such as IE7 and WMP11).
I do enable automatic update notifications though so I do keep up to date, but I don't let it do it fully automatically.
Microsoft strongly recommends using Windows Update to download and install Windows Vista SP1 on single PCs:
The download size from Windows Update of Windows Vista SP1 for x86 is 65 MB (compared to 450 MB from the Microsoft Download Center).
The download size from Windows Update of Windows Vista SP1 for x64 is 125 MB (compared to 745 MB from the Microsoft Download Center).
Well I don't know why microsoft strongly recommends to use Windows Update... probably so people do actually install the correct one.
Yes your right, x86 is 32-bit Windows, although many PCs now use 64-bit processors.
Most PCs ship with 32-bit (x86) version of Windows, which works on both 32-bit and suitable 64-bit platforms.