the Inspire should fly without the update, but the app will keep nagging you about it. that's what a friend of mine is seeing with his. I think he is waiting for me to get back to town before he updates his because he is nervous about breaking it.
I updated my Inspire and two controllers without any issues a few weeks ago. I used my 16gb SD card that came with my Inspire to update the camera and bird and used a 4gb usb 2.0 thumb drive to update the two controllers. I did the copter/camera/battery update first, then my master controller, then my slave controller. only issue I had at all was that it took about 30 minutes to update my master controller.
you have to remember to delete the .txt file created during the update before going on to the next device.