for questions #1 and #2, imo, and those who lurks in this forum too, will recommend you to go to latest. i'm really sorry but i haven't been into the psp scene by the time of m33 was on so i don't think there is any patches that would let you run games on and later 6.37.
for question #3, there are ctf themes and other plugins only compatible on a certain cfw, so i guess you have to check them out really carefully. ie. a ctf theme for 6.60 won't work on anyother cfw version. this is one ruling about plugins you should take in mind.