In a recent report from product support, they have explained that customers running SP1 are experiencing less issues with no reported regressions not known or otherwise were not included in the post SP1 rollup. SharePoint hotfixes are cumulative. As always please test, test, test. The best and I'd say required reading and documentation on deploying service packs and hotfixes for WSS and MOSS are on TechNet. There are tips and tricks for deploying a TON faster. Yes, you should install SP1, Yes, you should install the post SP1 rollup or blackout to be on the latest set of fixes available. The post SP1 rollup below and the black out rollup builds are below.
Source & hotfix's links : blogs.msdn.com/sharepoint