Seems like you have more than one issue going on. I think, ultimately, you’ll be better off calling Sonos Support directly to discuss it, but will try to suggest a couple of things here.
First, I’ve never seen any device automatically being updated from S1 to S2. There has, to my knowledge, always been a required acknowledgment press of a button to move between the two.
Second, your ‘updating’ picture above doesn’t imply a change in OS, it only suggests an update of the OS currently installed, be that S1 or S2. Since Sonos is supposed to be rolling out an update to S2 today, while I haven’t yet received it, it certainly makes sense that your system may be doing so as we speak. I wouldn’t be overly surprised if there was a concurrent update to S1, but I’m not sure about that, and no longer run that OS myself.
However, your comment about being laggy on both wired and wireless connections makes me wonder if you have other network issues. At the very least, I’d be tempted to reset my network by unplugging all Sonos devices from power, and then rebooting my router. I would give the router a couple of minutes to come back up before plugging back in my Sonos devices to power. This will refresh both the firmware running on these devices, and force the Sonos devices to ask for new IP addresses, which I think at this moment may be troubled in your router.
If that does resolve the issue, I’d look in to how to set up reserved IP addresses in your router’s manual, and do so. It’s good networking practices, and will help in keeping this particular issue at bay.
However, if this doesn’t fix the lag your system is experiencing, I would submit a system diagnostic within 10 minutes of experiencing this problem, and call Sonos Support to discuss it.
There may be information included in the diagnostic that will help Sonos pinpoint the issue and help you find a solution.
When you speak directly to the phone folks, they have tools at their disposal that will allow them to give you advice specific to your network and Sonos system.
After 3rd attempt at downgrading and setting up a new split system I am back to where I wanted to be. I have turned off auto updates on both S1 and S2. So far the Play:3 have not been updated. I have also updated to the new S2 app.