So i was thinking today...
Bethesda's 'updates' have messed up more than they have fixed (no offense to bethesda intended)...theres a few i like, like the new horse combat...but other than that...My ps3 game crashed ENTIRELLY after 1.5....So whats better? Bethesdas updates? Or the mods that people make, that fix things and make things look/work better?

Both, they complement each other very well. In many ways modders and Bethesda have been working together for a very long time.

Mods are better.

I would say updates are good, but with mods certain things that are not considered major by beth will get fixed. Beths updates can also be buggy like you said. The only problem with mods is that other mods are not made to necessarily be compatible so you can get compatibility issues when using multiple mods.

From my experience with Oblivion and Morrowind on the PC player mods can be very good, but there are also a ton of mods out there that are also filled with bugs, glitches, and incompatabilities.

I tend to trust Bethesda's work more.