Just to add to the previous comments, Froyo was actually a huge Android update. While it contains a number of new features, the most important is the addition of a JIT compiler, which considerably speeds up performance. You will immediately be able to notice the difference. While the Ermine update contains some minor bugs, most people seem pleased with the decision to install it. Plus, the community has found some ways to work around some of these
problems.
Just be aware: any time you monkey with the OS, you have a chance to seriously mess things up. Some people have experienced the dreaded "white screen of death" (WSOD) upon updating to Ermine, although my private suspicion is this problem is more likely related to a hardware problem. In addition, one of the members of the forum has completely messed up his device by fiddling with some system files. I highly recommend updating to Ermine, but just be aware of the risks before you take the leap!