As for your first question:
All you need to do to update this program is to take replace the files on your SD card. You will find your programs in the APPS folder. You just replace the three files in the NEOGAMMA folder. And then your done!
If you want to take backups of your games, you could use a PC burn program with a way to copy discs. I used NERO to do this with my discs back about a year ago.. It works fine! But I would advice you to buy a 500GB or larger, harddrive and start using USB Loader!