Marty Chinn said:
I've read that FAQ and it's too basic and doesn't cover enough topics. Doesn't explain the various components of the installs and stuff like that. Also doesn't address the pros and cons of sticking with 3.2.
It's really hard to quantify all the pros/cons, and many of them keep changing (like Twilight Hack compatability) so constant updates would be required to keep a list like that relevant.
The key things to know are that upgrading to 4.0 from 3.2 will currently disable the Twilight Hack, disable Freeloader (but who cares these days), stop the HBC from being installed and block some (mostly piracy- and cheat-based) apps from running. On the positive side, your Wii would support SDHC cards and would allow you to move your channels to SD card. You would also have access to the Wii Shop, although that upgrade can be performed without changing the system menu, I believe.
There are plenty of other differences, but they are mostly minor.
Given the choice of whether to update or not, I'd basically leave it to whether you want the new SD stuff that came with 4.0.
And on the components and what they do...
Twilight Hack: Buffer overflow attack requiring Twilight Princess game leading to running homebrew apps.
Homebrew Channel: Channel that stays installed on Wii and allows running of homebrew apps more easily than the Twilight Hack
cIOS36: Hacked version of Nintendo's IOS that includes USB/SB boot support. Replaces a real IOS on the Wii, which can lead to bricking if not installed properly. Technically illegal due to the inclusion of Nintendo's original code.
USB Loader (check GBATemp's Wiki page for the multitude of released versions such as Ultimate and Configurable): Homebrew app (with installable channel options) that uses the hooks in the cIOS to allow you to rip discs to a hard drive and/or SD card and play them.