I think that minor updates (security fixes, etc) should be installed automatically but users should be given a choice for large updates which change major functionality. An example of this would be if Mozilla Firefox updated automatically from 3.6.15 to 3.6.16 but asked the user if they wanted to upgrade to 4.0.

Software which either forces you to upgrade to newer versions without asking or keeps pestering you to update after you have said no (Mozilla, I'm looking at you..) is evil.