All updates and service packs are FREE to download. Not sure I understand what budget cuts have to do with any decision on whether or not to install updates.
Granted, there are many updates that are questionable as to whether you need them. However those updates that fall in the area of Critical Updates or Security-related updates gerally are released to patch newly-found security holes in a given operating system.
If your network is not connected to the Internet in ANY way, there probably aren't any risks associated with not installing these types of updates. If your network is connected to the Internet (even if only by dial-up), unless you have a VERY ROBUST and CURRENT firewall installed, you run great risk of a hacker gaining access to and possibly control over your network unless you install these OS Critical updates and security patches as they are released.
Service packs can be a different story. Generally, service packs do several things for you. They will usually include program enhancements as well as a roll-up of fixes for bugs found since the last service pack. They will also provide a roll-up of critical updates and security patches released since the last service pack. You could make an argument against applying service packs if your OS(es) are currently stable AND you are regularly applying critical updates and security patches.
