I am currently running 10.1.1 and I have two main reasons for upgrading
which I believe the service pack addresses. Can someone please confirm ?

1. After a while of running 10.1.1 we are now starting to see some
clients taking a long time to register, with the server unknown in the
agent properties of the Vista client.

2. As soon as the user logs in for the first time update going from
10.1.0 to 10.1.1 is applied. Just for background I've scripted an agent
install, which installs 10.1.0, and once the user logs for the first
time 10.1.1 is updated, which I find a very unecessary install and
hoping some of our process can be reduced with 10.1.3 if updates can be
incorporated into initial install.

applying 10.1.3.

I would like to stage this to specific clients first as I am cautious,
we have over 1500 devices. My understanding is that the by default once
I install the update the agent will automatically update all my devices
if I don't set an action/schedule in the "Deployment System Updates".
The notes on this are a little confusing. Can someone explain this a
little better ?

I need to have the server updated and only specific clients so we can
test the patch before large scale distribution to devices.