I have been using Gentoo for years, but I only now just began messing around with overlays.
When I update my system with something like emerge -DuNav world, will it install packages that are in the overlays I have on my system instead of what the Gentoo repositories give me? Should I disable my overlays before updating? I don't want any unstable packages installed that will make my Gentoo system less awesome than it already is.
Thanks guys. Best forum on the net

EDIT: Sorry, I didn't read the post right at the top about the same topic before writing this. So I guess my new question would be is it safe to do a world update with overlays installed?

My guess would be:
overlays usually contain more recent packages than those in portage - and you have some of them installed(?) - and you allowed this.

If it is working awesome nonetheless - good! (I run a ~x86 system and do not have the impression of it being unstable).

Would it be safe?
You would install yet newer versions from the overlay - which you WANT (just by even using the overlay)
You could check the list of packages to be upgraded for which of them are pulled in by the overlay and which are from standard portage.
A world update would likely pull in some things not in portage but only in the overlay. It is as safe as it always was ... as it was when you decided to use the overlay.

This depends to a big extent on the concrete overlay and your portage settings.

If all the packages in the overlay are marked stable (regardless of their true "stability") for your architecture, they will take precedence over the ones in portage.

If the packages in the overlay are marked unstable but you are in arch (ACCEPT_KEYWORDS=~whatever) the same applies.

For the rest of cases, if you want to install a package from the overlay you will have to unmask it using package.keywords and/or package.unmask, regardless if there's a package with the same name in portage or not.

In any case, when you use emerge -pv or -av a small number is shown for each package between square brackets [x] that tells you the overlay from which this package will be emerged. Zero is used for the official portage. At the end of the listing you can see the meaning of the rest of the numbers.