You don't have to install it, but it will remind you...a lot.
there's a couple of posts here that the update was auto installed. I find it suspect because on my original Droid I had to accept the update.
Found this on Android Central. If you will do this (preferably before installing 2.2), it will take care of just about every issue. Be sure to follow it exactly, and you will love your X! Even if 2.2 has been installed, do this procedure anyway.
After some feedback and some thought I did a slew of factory resets. The thing I kept missing was what order to do what in.
Every time before a reset I would go into privacy--> and uncheck backup my data as well as uncheck factory restore. The problem is, even after a factory reset by default automatic restore is check and all apps downloaded will still start pushing down.
Most of us just automatically log into our gmail accounts. The only way to get a truly clean reset is to NOT log into your google account after a factory reset. Just skip it. When the next screen shows up with choices of accounts to choose from asking you if you're done adding accounts... still, skip it - tap done adding accounts. Once you're fully booted, go to privacy--> you actually have to ENABLE or check off "back up my data" so you can uncheck "automatic restore". Once "automatic restore" is unchecked, then uncheck "back up my data again". Now you can log into your google account and you are finally fresh.
*(you may see a screen again with a check box asking if you would like google to back up your data - uncheck this)
As per usual, please backup any important info such as your pictures and format your SD card right before you do your factory reset.
Things seem to be much better this time around