...I don't know where you read it would cause problems, but they were woefully wrong. It may cause problems with a 3rd party program, but certainly not the OS itself.
I was skeptical of Windows Update when it was first introduced, but it's proven to be pretty reliable. For the last couple of years I've left it on automatic and haven't had an issue (other than occasionally having to wait a long time for the system to shut down because it has dozens of updates to install).
I concur. Windows Update in auto mode does make life easier in terms of not having to worry about doing it manually. Even though the above-mentioned occasional wait for a shut down or those darn nags alerting you that the computer will be shutdown unless you postpone it. But yes, auto update doesn't cause issues with the OS- it makes it better (in theory).