There has been some discussion recently of problems with System 7 Tune-Up, most notably in concert with Ethernet boards and MacTCP. The problems appear to be isolated to just a few people, however, and Apple strongly recommends that everyone using any flavor 7.0.x install System 7 Tune-Up. I suspect that the problems may stem from the installation process, but supposedly you can avoid the Installer by dragging the files to your System Folder. If you circumvent the Installer, make sure you install all of the files, making sure to turn off File Sharing before installing (I presume the file can't be replaced otherwise?) and drag the files to a closed System Folder so that they will definitely end up in the right places. Several people have used a beta version of MountImage to mount the disk image of the Tune-Up disk, a process which might be responsible for some problems. Tune-Up also bothered Chris Johnson's excellent Gatekeeper virus utility, prompting him to release version 1.2.2, which "works around problems in System 7 Tune-Up."
All in all, I concur with Apple that the System 7 Tune-Up is a good thing and everyone using System 7.0.x should use it. However, I'd add that it's probably best to restart your Mac with all the extensions off and to use the Installer if at all possible to make sure that everything is updated correctly. I almost wish I had a StyleWriter because the low memory handling and speed benefits of the Tune-Up aren't all that noticeable on a relatively fast machine with a lot of memory although I believe they are there. The new StyleWriter driver reportedly speeds up printing by a great deal, though, so those of you with StyleWriters should especially use the System 7 Tune-Up.