I watched this older film after seeing (and loving) Working with Jigsaw; it certainly would have been better to have done it the other way round, since Working is the better film of the two. That said, Living with Jigsaw produces plenty of laughs and works even if you know the joke. The interesting thing for me was to see how well Capel knew the strengths of his original film, and also where it needed to be improved.
Specifically, Living is very funny in the use of Jigsaw, the absurdity of his small 'pranks', and the fed-up reactions of his 'victims'. All of this it does well, and it is telling that all of this was retained into the second film. Where Living is weaker is that it is too rapid and one-note; not something I would have noticed if I'd watched this first, but Working has better pacing (and spacing) as well as elements that put Jigsaw within the environment better (in Living he is never really a flatmate in anyway but name). Still very funny and worth seeing whether you watch it first or second.