If you don’t your Kindle will be booted offline.
In a recent announcement, owners of pre-2012 Kindle e-readers are encouraged to update their devices as soon as March 22 or run the risk of having their kindle devices offline until they perform a cumbersome tethered update with a computer.
Wireless updates are by far the most convenient ways to keep your kindle software updated so this is a preferred method of keeping your ebook up to date to avoid losing access to your Kindle collection including books you have already purchased as well as access to the Kindle Store.
If you are not sure if your Kindle needs the update, this handy list here (http://www.amazon.com/gp/help/customer/display.html?nodeId=201994710) should let you know if your e-reader is affected. If in doubt, it is highly recommended that you do as soon as you can anyway.