It all depends on how well your update went, and whether there are any issues you can't really work around. In my case, I did a factory reset because a persistent GPS problem seemed to get a little better on Lollipop and I had hopes that a reset might make things even better. Which it did, and the whole phone feels much snappier, though I lost a few other things like the ability to use my fingerprint reader with Mobileiron. So it was a bit of a wash, really.
I have very few "local" apps (most of my apps save to Google or other cloud servers) so really it was a matter of noodling around with a few system settings and logging back in to a half dozen apps. So, for me at least, a factory reset means not a whole lot of effort or risk of losing data that is valuable to me.
If you find an oddity, start by clearing the system cache (power down, press POWER-HOME-VOL UP, when a screen comes up release all but VOL UP, select "clear system cache" or similar, then select reboot). No data is lost. This is a good thing to do.
If you find an oddity with a specific app, you can try clearing that app's data under app management.
Otherwise, if you're like me and don't keep anything of value locally on your phone, just reset it and forget it.