Risk of not having Hardware Firewall?
 

What kind of risk and potential problems I could run into if I have no hardware firewall? (i.e. I plug the computer directly into the Modem)

The modem itself has no firewall (disabled by ISP on purpose so they can sell you firewall service separately)

The reason I don't want to use a router is because the DL speed becomes 30%+ slower when connected thru a router. (I've tried using 3 different routers w/ the same result)

Computer is always kept up to date, Window XP firewall on, but no 3rd party Firewall program.

Hmmm...no one knows??

its not gonna make much of a difference, its a matter of where u go and what u click.
just be aware of what u browse. and there will always be ways to get into ones computer.

have you tried playing around with the port settings on the router? i dont think it should be slowing down speeds by that much.

having a router protects you from a lot of exploits from the internet. probes against you are happening on a high frequency. even if you keep you computer up to date, you may get blasted with a zero day exploit that microsoft did not patch yet. for example, there was the blaster worm from years ago, and there is the sasser worm, and recently there was the conficker worm. all of this can be prevented if you are behind a router, in a clean network environment.

in short, use a router. or at least have some sort of software firewall up. using a router does not mean your internet speed will go down. that is entirely due to port forwarding issues.

A REAL hardware firewall is not something people tend to have.

A router saves you a lot of trouble for fraction of money.

On the speed issue, are you sure you have the router properly set up? a good router should not decrease any speed (or at least hardly noticeable) and in multi-pcs situation actually allow traffic to flow faster than a LAN without.

My suggestion: get a decent router (I recommend Linksys higher end routers or Dlink Gaming series, and/or Apple Time Capsule if you want idiot proof solution)

If you have some highly important data to protect or running a VPN, I'd recommend a Juniper Netscreen. Relatively affordable (an entry level can be found for less than $150), high performance, and very well supported (great company/support, multi-layer capable... etc)

At least I used to have very good exp with Juniper about 5 years ago. Some might argue Cisco is better but that's pure $$$$