1) You can download the latest ver of the same main release as your current switches, i.e. 12.2 -> 12.2, 12.1 -> 12.1.
You have to check the release note of those IOS to determine the supported features, I can't tell which one is fit for you. Just as you said you are using SMI, so upgrade to EMI will enjoy more features, but you have to check it yourself.
2) As stated in Q1, please check the release note, it tells you the supported features. You have to learn to search the available information from Cisco. Because it is faster to wait for others to feedback. And I am also just search the web and tell you. Please check it yourself.
3) It is always recommended to backup the config., no matter the vendor tell you it won';t lose the config. during upgrade. I suggest not to upgrade any equipment under production and office hour. Please arrange a schedule to do it and works w/ your operation department to detemine the available downtime. Downtime will include backup, upgrade, testing and fall-back (if the upgrade fails). I can't recommend the lenght of downtime, you need to plan it by your situation. If you can carry a poilot upgrade before actual upgrade then you will have the idea.
You can also check Cisco web that it will tell you how to upgrade the IOS.
4) It is the same that I can't tell which one is the best, only the one is running smoothly and stable then it will be fine. But I did not carry any test. You can ask your Cisco equipment provider for their comment.
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Since the last blog on IOS-XE release, there has been a standard maintenance release which was followed by the recently published Extended Maintenance Release(EMR) and the last release on the 16.x train, IOS-XE 16.12.1. With this being an EMR release, it ...