Yes you need SP1, it contains numerous security updates. Service packs should always be considered MANDATORY and to be installed within the first WEEK of being released unless you have an exceptionally good reason not to, like when HP borked their Windows installs so that XP SP3 caused an infinite reboot loop.
IE9 is optional, but if you're doing the supremely unwise thing of using IE to begin with, then you should always have the latest version to take advantage of improvements in security. IE has so little security to begin with, you need everything you can get. You can go back to IE8, but that would be a rather unwise decision. If you don't like IE9, a better move would be to try one of the other browsers out there. Firefox, Opera, Chrome, and Safari are all free, and all lack the security issues that have been hounding IE since version 3.0 introduced ActiveX which opened the pandora's box of malware unto the world.
So to recap: Service packs are mandatory, browser upgrades are optional, but generally a good idea. And if people never fixed things that weren't broken, we'd still be a nomadic group of hunter gatherers wandering around the African savanna's because there was nothing "broken" about that system. None the less, people found ways to improve upon things, and one thing leading to another, fast forward about 100,000 years, here we are today.
I have a windows 7x 64 os . windows updates keeps nagging me to download SP 1 update & IE9.. Do I really need them? If I download IE9 can go back to IE8 if I want? I have had this computer for a year and half now, and it has worked perfectly. The BEST OS windows has ever put out .. I don't want to "fix something with there updates : when right now it is NOT broken..