No, security-updates module is Open Source. We recommend everyone use it.
And would this also imply that my server will use the latest version of PHP instead of the older version centos has?
Why would it imply that? It is wholly orthogonal to the issue of what PHP version your system is running. It is a frontend to yum or apt-get–it doesn’t create packages out of thin air, it gets them from whatever repositories you have configured. 
If I choose to buy virtualmin pro, would I need to completely reinstall my system?
Not usually.
Since I installed virtualmin gpl and then added webmin as a module..
I’m guessing you mean the reverse (Virtualmin is a Webmin module…Webmin is not a module of Virtualmin).
If you used install.sh from the download page here at Virtualmin.com, then upgrading to Professional is easy and quick. If you installed manually, by downloading the .wbm or .rpm from Webmin.com, then upgrading is usually somewhat time-consuming, and also requires a bit of human involvement. (This is because a system installed with install.sh is in a reasonably known state–if you installed manually, it’s impossible to guess how things are setup…so the upgrade process is pretty cautious about the changes it makes, and will give up if things look odd.)
And everything is already configured with yum.
I’m not sure whether you mean you have already configured your system with the Virtualmin.com repositories (either manually, via install.sh, or direct installation of virtualmin-release), or if you’re talking about the Webmin.com repositories (which contain a dramatically more limited collection of packages–nothing OS specific, and probably none of the Virtualmin plugins).
And I would much rather use virtualmin to handle that to get the latest version of php etc.
The Virtualmin Package Updates module uses yum (or apt-get, or a .wbm repo). It just provides a friendly UI. It doesn’t alter what packages are available–if you didn’t use the install.sh script, or you didn’t setup the Virtualmin repositories in some way, installing the security-updates module won’t make any additional packages available.
But, we definitely encourage you to use the module. Running old versions of software is a really common source of security and stability problems, and anything that makes it easier to stay on top of updates is probably a really good thing to have.