Hi!
Replacing old KS 1.3 with ANY other higher versions (2.04, 2.05 or 3.1) will bring you trouble running games. On the positive side, you'll get better support for peripheral expansion HW, more user-friendly Workbench GUI and more sofware options in general.
Unfortunatelly, benefits of "higher" Kickstarts are impossible to reach on stock A500. OK, you have additional 5Mb of FAST RAM, which is enough for "sofkicking", without real Kickstarts. But in the same time, if you don't own real KS chip, this could be illegal - Kickstarts are still copyrighted - respect the owner.
My point is, clearly, that you should try to get some CPU accelerator and HDD for A500. This would speed-up everything in boot process and make it possible to upgrade both Kickstart (in any sense) and operating system (Workbench). At the paramount of A500 operations, you will be able to install WHDLOAD, application which allows running almost every game made for non-AGA chipset, clearing your way of typical KS constraints we had for years.
For more info, feel free to send a PM.