updating millions of rows in multiple tables sql server 2005
Most efficient is a fuzzy term. You're talking about updating about 122 million rows. If you start running naive updates now, it will probably finish before you can create a useful estimate. (I'd expect it to take about half an hour on my development machine. Updating 50 million rows takes 12 minutes.)

Dropping indexes beforehand is fine if you have your DDL under version control, and you can rebuild the indexes more or less automatically. Dropping all constraints should make the updates run faster still, but again I'd do that only if 


execution time were critical, 
DDL were under version control, and 
I could rebuild all the constraints more or less automatically.


Cascading foreign key constraints can be an issue. 

Personally, I try to avoid situations where execution time is critical. I don't usually drop primary key and foreign key constraints. And I always rehearse outside the maintenance window.