I am currently running 3.6.4 and am scared to upgrade. I am worried about the part that says php custom code is not allowed anymore. Does this mean I will lose the spot where I can add html/css inserts? If not what does this mean? How will this affect what I can currently do now.

It has nothing to do with CSS. This only affects those who add PHP code to various areas of the site. If 3.6.4 is working OK there may not be any reason to upgrade at this time as well.

So then it would affect my samsarian php widget plugin that I use? Yes 3.6.4 is working fine just I have always been told to upgrade things as they become available.

Does this mean I will lose the spot where I can add html/css inserts?

You can still add the custom CSS in the CSS Inserts. What you can't do is add php code in some of the options.

Take a look at HOWTO: upgrade Atahualpa to a new version so you can see how you could have two versions of Atahualpa in the theme folder and swap back and forth.

And it shouldn't affect your PHP widget.

Thank you.