Upgrading to either OS3.5 or OS3.9 is a matter of choice. Neither one in my opinion (and I know it goes against the grain of many here) is a significant upgrade from OS3.1 *because* most of what the two updated OS's offer is available as patches for WB3.1. (example CDFS, CDPlayer, MUI, BOOPSI, GADTOOLS, MPEG Player, updated libraries and datatypes, etc..). While I do not entirely agree, it has been argued by many that both upgrades are really nothing more then a bundling of the updates for WB3.1 with a little "cleanup". I have used both OS3.5 and OS3.9 and have always gone back to WB3.1 and don't miss anything from either upgrade.. but that is me.
If you must upgrade then please bypass OS3.5 completely and go with OS3.9 as it is much more stable and more of a "finished" product in my opinion. I do agree that if you have an accelerated AMIGA (anything with an 060 or PPC) then upgrading to OS3.9 is a reasonable choice (although there are plenty of tools to let the '060 work just fine with WB3.1).
Regards,
Ltstanfo
PS: I have a C= A4000T with VT/VF, TBC2, WarpEngine 4040, Multiface III and Ameristar 4066.