Some users have reported problems with 1.5tb drives, 1tb drives seem to work fine.
On the matter of not upgrading the firmware because you could lose data through not having a backup - bear in this mind - you could lose data NOW even if you don't upgrade. You could lose data simply installing that second hard drive.
All it takes is a virus, a software glitch, a click in the wrong place (commonly known as user error), a power outage, a hard disk failure - your options are back it up or lose it.