I don't understand why so many people are afraid of hotfixes. Every single server I operate has a hotfix installed within 2 weeks of it being released. As a custom software developer, I will not even support my products on servers or workstations until all microsoft hotfixes have been applied. It's the first thing I check. I have found this to save me countless issues. I have a lot of experience around network engineers who take the alternative 'if it's not broke don't fix it route', but have seen many times how my system has (in the last 4-5 years - since microsoft has really gotten good with update stability) saved me a lot of time.
Hotfixes come out for a reason - in the rare case that they do "break something" (such as what happened with Win2K SP2, and WinXP SP1) - it's ussually for a GOOD reason; because "unbroken" things were vulnerable to attacks, or causing system unstability.
The *one* time I had a hotfix actually seem to break something, i spent a few hours on the phone with some of the developers at microsoft to assist them in developing an issue - and they had a new hotfix available for me within a week. That single time when upgrading cost me so much time is compairable to just one single virus infection; or untracable bug / performance issue.
If you're dealing with a hosting provider that won't apply service packs and hotfixes, chances are that you're dealing with a hosting provider that is charging a very cheap rate ($5/mo) - and you're getting what you've paid for. Find a provider that deals in quality - not quantity. What is an extra $250 a year? That's about 6-8 hours of time from your network admin troubleshooting a problem with your provider.
Look at how many posts on this site are complaining about how GoDaddy's hosting service isn't working, or some other hosting provider isn't working... Move your business to the small guys that specialize and charge a little bit more; and you'll end up happier in the long run. Small guys can provide big bandwidth too. I use GoDaddy for hosting - but I lease entire windows servers that I control - multiple of them for fault tolerance reasons as well as load balancing; Charging $35/month for hosting - it's not that I'm getting rich - it's that I'm adding value by providing a higher quality support with the same infrastructure reliability as the 'big guys'... I've lost some customers to those $5 a month places - and half of them came back!