Geek confirmation here, AVG Free does have updating problems, especially on Vista. The try icon turns gray when it can’t auto-update. If you manually click the update button it downloads the update, but sometimes doesn’t install it correctly. Probably a Vista permissions/security problem. I installed the latest version on a cow-orkers Vista machine a month or so ago, it fixed the problem for a while but it’s doing it again now.
It doesn’t happen to everyone though, AVG is still a decent enough program.
An AV program usually doesn’t offer protection against all spyware. Avast seems like it provides some form of protection, but I would not know for sure since I haven’t used it.
To protect against spyware (for free) I would get Spybot and Ad-Aware. Get both as either one won’t catch everything.
If Spybot and Ad-Aware scans come up empty then I guess Avast would be enough for you.
Some software (I use Trend Micro) provides you with all three of the essential forms of protection (firewall, spyware and virus), but you would have to pay for those.