It's definatly worth ditching Virtual PC and installing BootCamp, lol. I say it depends on how much you use it. If you need it alot and make alot of use of it, then go for it. But if you just use it for random things every so often, there's not really much point.
Ahem, right. Getting back to the original question.
If your Windows environment, even in VPC, is open to the internet, it's going to be susceptible to every irritation the Windows world knows (and they are legion). I think the only thing that VPC maybe does for you is give you the benefit of the OS X firewall. But you are vulnerable to all the same security exploits that any other Windows user is.
So yes, you really should install all of those updates. SP2 in particular does a *lot* for you, so that should be on your definite list....