Help On Updating 1.3 Million Rows On The Production Server

I need to update about 1.3 million rows in a table of mine.
I am getting the data from one of the columns of the same table and
updating the new column.
I am doing this using a cursor which I have put in a stored procedure.
As this is a production table which users might be accessing.It is a
web based application and I can't slow the system down.
So I am willing to run the stored prcedure during off peak hours.
However, do I need to put this in a transaction?
If I did put it in a transaction what type of isolation level should I
opt for?
Data integrity is very important for me and I don't mind to compromise
on the performance.
I am doing this because one of the columns which has "short description"
entry is has become too small for business purposes and we want to increase it's
length from varchar(100) to varchar(150).
As this is SQL 6.5, I can't increase the lenght of the column.
So Iadded a new column and will run the stored proc.
What precautions are to be taken?
This is on a high priority basis and very important too.

Thanks in advance...

Stored procedure code:

USE DB_Registration_Dev
GO
IF EXISTS (SELECT NAME FROM SYSOBJECTS WHERE NAME='usp_update_product' AND TYPE='P')
DROP PROCEDURE usp_update_product
GO
CREATE PROC usp_update_product
AS
DECLARE @short_desc varchar(100)
DECLARE @prod_id int

DECLARE sdesc_curs CURSOR
FOR
SELECT [Product].[product_id] , [Product].[short_description]
FROM Product

OPEN sdesc_curs

FETCH NEXT FROM sdesc_curs
INTO @prod_id, @short_desc

WHILE @@FETCH_STATUS = 0
BEGIN
UPDATE Product
SET [Product].[sdesc] = @short_desc
WHERE Product_id=@prod_id
FETCH NEXT FROM sdesc_curs
INTO @prod_id, @short_desc
IF @@FETCH_STATUS <> 0
PRINT ' Finished Updating the table...go ahead and have fun ...! '
END
DEALLOCATE sdesc_curs
GO