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Does SP1 contain also bugfixes or is it just an enhancement to support new types of Hardware (e.g. the Arria,etc.)
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As we can see, it contains mainly about the support for new devices. If you do not care much about those, hold version 7.1 as you wish.
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The SP1 release notes are available at
http://www.altera.com/literature/lit-qts.jsp.
All service packs include bug fixes in addition to the listed feature changes. I normally recommend using the latest available version (7.1 SP1 at the moment) unless you happen to know there is something in the latest version that is bad for your design (a rare situation) or your design is so mature that it really isn't worth the bother to upgrade the software.
When a service pack or new version comes out, I recommend installing it in addition to the previous version rather than uninstalling the previous version. That way you can easily go back to the previous version of Quartus if you run into a problem you suspect is specific to the new version. This is the way I've handled new versions since way back in early MAX+plus II days. (For Nios tools, it's not as easy to go back and forth between versions because the environment variables don't all update automatically for that. For Quartus itself, there's no problem having multiple versions on your computer and going back and forth between them as long as you don't run two versions simultaneously.)
If using the install file that contains just the service pack, I install a second copy of the base version and install the service pack on top of the second copy.
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