That said, I don’t like Microsoft pushing a new browser on me as part of their Windows Update mechanism. While I know that a new browser is not a critical update, and usually choose to defer the installation, 99% of Windows users just wake up one morning with a new browser installed, and with old/older web applications not functioning.
Microsoft just released a “Toolkit to Disable Automatic Delivery of Internet Explorer 8”, which suggests the release is imminent. If your work cycle does not depend on any JAVA/ActiveX based web applications, then update, by all means. If you still need access to your IE 7 or IE 6 (or, God forbid, IE 5), make sure you change your Windows Update configuration to "Download updates but let me choose whether to install them" and make a decision about installing it later.
PS: IE 8 includes a “compatibility mode” that you can turn on, if any site becomes unreadable. It effectively turns IE 8 to IE 7 (doesn’t go back to 6 though, so JAVA apps are still screwed up, due to MS stopping JAVA support).
PPS: just installed the latest beta of Windows 7. It seems to have a newer version of IE 8. I’ll report on the beta at a later post.