When one makes a plugin or load a plugin to work on, should load skyrim.esm AND update.esm -- or should I just load the skyrim.esm file?

Folk have different opinions, but I would recommend including both Skyrim.esm and Update.esm. The game loads both, so no reason the mod shouldn't include both as well.

That is my reasoning also, just making sure... better to be safe then sorry

Update.esm can cause problems when using Version Control. But that's about it I think.

What is "Version Control?"

http://www.creationkit.com/Version_control