mrmagoolew:
Hi, Roger,
Thanks for your response. I think what the other website was showing me was that the bootloader code was an older version. I don't think it had to do with the IDE. It said something about the Atmel chip itself. I should have bookmarked the page, but didn't, and I'm not able to find it now. It did say about a firmware upgrade though. Like you said, I may not really need to do the upgrade though, and it might work fine. I don't know. I found a cheaper ISP at sunroom.com for $23. I don't know how well that would work. If you think it would work, let me know. I guess you get what you pay for these days. Maybe I'll play with my board for a while, then decide what to do. Lew
The AVR chips don't have any "firmware" in them at all from the factory. What we use is an AVR chip with a small block of code installed in it called the bootloader.
On smaller Arduino boards, the bootloader only uses 512 bytes of flash (out of 32K). The larger boards like the MEGA have an 8K bootloader (trivial since you've got 256K of flash). The MEGA bootloader has a huge "monitor" program in it which allows a user to look at memory, flip bits, etc... 99.4% useless. When removed, the 8K bootloader can be reduced to 2K (I've done it on all my MEGA boards).
All the bootloader does is, when the Arduino is reset, the bootloader looks for serial port activity for a short time, asking "does he want to upload anything to me today?". After the timeout, the bootloader jumps to the pre-defined start address, hopefully running a program that had been previously installed.
The bootloader "stays out of the way". It doesn't use any resources (other than the tiny bit of flash it's installed into) and it only adds a short delay between reset and program start (while it's checking for a new program).
The bootloader makes it easy to load, test, reload, test, etc.... your code over and over again without having to plug in an ISP programmer each time.
If you had an ISP, and if you wanted to, you COULD get rid of your bootloader altogether and program the chip with the ISP. Then, at reset, instead of checking for new code, it would just jump directly to your program. Of course, the Arduino board would then need to be re-programmed with the ISP each time you wanted to update your program (or you could re-install the bootloader!) 
Last bit... unless you plan to build your own ISP, don't even THINK of buying any programmer other than the Atmel. Believe me, all the other ones out there are just basically copies of the original "Arduino as ISP" circuit and as I mentioned before it's not 100% stable. The Atmel programmer ALWAYS works 100%.
The AVRISPMKII (Atmel programmer) is only around $30 to $35 USD... there's no good reason to buy anything else (IMHO).
So, as I said before, unless you are going to really "get into" programming or if you have PROBLEMS with your bootloader and NEED the newer one, leave it alone. It's not going to affect your CODE at all.
Good luck!