I usually apply all the Windows updates that Microsoft labels as "Critical" or "Important." However, since Windows patches sometimes cause problems of their own, I often wait a week or more to install those that I determine I don't need right away.
If you have Automatic Updates set to download and install updates automatically, you won't see any Windows Update alerts in the notification area of the taskbar (the area near the clock) or anywhere else. Likewise, if you've disabled Automatic Updates, you won't be prompted to view or download anything, though you may see an icon warning you that you've deactivated Automatic Updates.
To turn off the warning icon, open the Security Center Control Panel applet in XP or Vista, click Change the way Security Center alerts me, and choose Don't notify me and don't display the icon (not recommended).
The safer course is to use either the second AU option—which downloads updates but alerts you before installing them—or the third option—which alerts you that updates are available for download and installation. These two options will generate the AU alert icon in the system tray.
The most recent Windows update I'm postponing is the .NET Framework 3.5 Service Pack 1 for .NET Framework Assistant 1.0. This is the patch that installed a Firefox extension that initially couldn't be uninstalled without jumping through hoops. Microsoft has subsequently updated the update to make it easier to uninstall.
Unfortunately, unchecking the patch's entry in Windows Update doesn't prevent the system-tray icon and pop-up alert from returning the next time your start your system. Clicking the icon opens Windows Update with the "Important" item you just unchecked rechecked.
To remove the entry from the Windows Update list in Vista, right-click it and choose Hide update. In XP, click Custom on the Microsoft Update or Windows Update screen, uncheck the item, and click Don't show this update again.
When you're ready to install the update you just hid, reopen Windows Update or Microsoft Update, and click Restore hidden updates in the left pane. In Vista, check the update you want to unhide and click Restore. If the "Restore hidden updates" option is grayed out in XP, click Custom and then Restore them now under the Important warning. Check the option and choose Restore and Check Again.