Hey Chris,
you have nothing to worry about with the updates, even with save games etc. The updates are automatic on the console to fix issues wiht the game, or new features that the game needs to support from the platform etc.
As issues are found, they get bundled into what are called Title Updates. These updates are mandatory for playing on live, and there is nothign to worry about in accepting one.
The Keys for the City etc is what is called downloadable content. This is a free package to unlock a 'cheat-mode' for the game.
There is also the Getting busy bonus pack which will cost 800 points, but will give you a whole host of additional pieces and features to play with.
Bottom line: the save game issue is fixed, and these updates are going to make your gaming experience better. All the DLC packs offer more content, some is free (keys_to_the_city) and some is paid for (Getting_busy_bonus)...
hope this helps.. have fun, it's a blast.