I've been using SE since before they where SE, (had a Sony J5 and Ericsson T39mc, then SE T68i)

SE phone off and on by it self?
It is a problem with the battery.

How to solve it?
Get a new battery.

How to prevent it?
Never let your battery run flat.
You don have to charge it full every time.

Trickle charging (charging a bit now and then) is better then cycling (charging it full, running it flat, charging it full).
Try to keep the battery meter green, start charging as soon as it starts to turn yellow.

SE has always used Li-Ion or Li-Poly batteries.

In the old days when phones use to use Ni-Cad or Ni-MH,
you have to drain the battery flat before you can charge, you have to charge it full once you start charging.
It was troublesome, cause you have to wait it to be flat to charge, or wait for it to be full to plug it out.
Then manufacturers moved to Lithium based batteries, you can charge them any time, for any amount,
but draining it flat and charging it full all the time will kill the battery. An exact opposite of Nickel based batteries.
But lots of consumers, and sales people, still follow the Nickel way of caring and charging Lithium batteries.

Care of your SE battery:
Try to keep it always green, you don't have to always keep it full.
Charge it now and then. i.e. every time when you take a shower, plug it in before you go, plug it out when you are done.
If you are using an Ori battery, it is safe to let it charge over night. I wouldn't recommend it for fake batteries. They tend to show the off/on symptom earlier compared to Ori batteries if left charging over night.
Do a refresh at most once every month. From what ever state your battery is currently at, charge it full in one go, let it run all the way flat (till it dies by it self) in one go, and charge it back full in one go. This recalibrates the battery meter.

Other notes.
Leaving lithium based batteries too empty or too full can wear the chemical faster.
They last the longest when they are at the 70-30% range.
SE battery meters drop one bar (the first sign of white infront of the green) at 70%, the meter shows full bar during 100-70%. It turns yellow (meter bar at half) around 30%. So as suggested above, always try to keep the bar green.

well, I guess it is up to the individual, from past experience, after every firmware update my phones feels faster.

I have 2 W980, I usually update one first, and the speed difference was visible.
My brother also using a W980, his is currently using an older firmware than mine, speed difference was noticeable.

When I had my T68i, i compared it with my friends which had older firmware, the speed difference was also obvious.

one time a firmware update fixed a problem i had with the shortcut menu (W980).
another time, a firmware refresh (reinstalling same firmware version), fixed a self restart problem (W980).

So ya, if there are some problems that require you to restart your phone, or if you feel your phone feels sluggish, a firmware update, or even a firmware refresh, might fix it.

if you are currently happy, then stick to your current firmware, but i do recommend you update when you have the time.

Doing a firmware update/refresh from a PC will replace EVERYTHING (settings, profiles, contacts, etc).
I'm not sure if the user space is erased during a firmware update, but just to be safe, let's assume it does.

Doing a firmware update OTA, will retain EVERYTHING (as stated by SE).
I have never tried this, cause the in-menu update utility always seems to report that you have the latest, even though SEUS says there is an update.

I assumed you already made a copy of the original and modified drivers before you replaced it? Doesn't the W980 have the best acoustic drivers?
Either way, you could copy out the drivers with A2Uploader before you update, and replace it back after.

W980 has a shared space for everything, that's y you don see all the 8GB, few hundred MB goes to the firmware.
The 8GB is split to user space and firmware, some predefined items, like wallpapers and tones, have a copy in both user space and firmware.
So you could delete some from the user space, but a copy still resides in the firmware.
That is y when you do a master reset, they still come back.
Using A2Uploader, you can delete all the wallpapers and tones, the demo videos, the msg templates, the built in java games/apps, even languages and input methods that you don't use.