It seems you have two or three questions.
Should you reply? Yes it would be polite to answer their email in a timely manner. You may be working with them soon or in the future. How you respond to people reflects upon yourself and in this case upon the company too.
Do you want to answer the question? Basically it's yes or no.
You can avoid conflict with the company, both from a point of being in trouble and from a point of being a potential interviewer or one whom is consulted about the candidate, by declining to provide references where a conflict of interest might arise.
You can choose to answer the inquiry, then it comes down to what you would say.
In the event that you do desire to answer there are a few choices.
They have asked for your opinion, from the sounds of it the truthful answer is that your opinion about the company is poor; if you want to make a quick and truthful reply then that's it.
You don't owe them an answer but the decision to answer truthfully or not is one that reflects upon your morals and in this case the morals of one person employed where this person might work.
Perhaps your opinion is better than a poor opinion, maybe your answer is that at first you enjoyed the challenge but now you are looking for change (whether you mean change in the company or change for yourself is something you can include or leave out - potentially inviting follow up questions).
You can give an incomplete and misleading answer, tell only the positive; again in this case it would seem that the reply would be short.
An alternative response is to lie and encourage them to work there. That seems like a bad idea since you may work with them soon or in the future; what are they to think of you?
I remember to this day the owner of a company asking me to come in for an interview. I asked if I would be able to ask him a few questions before I replied. He said he was quite busy but that the manager was able to answer all my questions when I come in. I mentioned that I had been to school XYZ and taken a particular course to which he responded that he knew all about that. Fine, when ...
So when I get there the manager doesn't know if my qualifications were good enough, didn't know if I could do the work ...
I asked "How much do you pay?", he said "What?". I asked much louder, everyone certain to hear.
He replied "Not very much". To which I responded "Then you know I can do the work, the owner said he knew all about this". Then I left, his mouth hanging open. I wrote the owner thanking him for the interview and to let me know his decision.
I didn't hear back from him directly but they continued advertising for the same job for almost two years - that was my answer, which the owner could have given when I first spoke with him.
Instead of being knowledgeable and honest they came across as the opposite, at least in the case of the owner; his son with whom I spoke was quite young and probably had to do as he was told.
Weirdest thing was that while I was waiting they had a sign on the wall outlining how they were a great company and that the owner's family is religious, adhering to religious principles and also charitable; donating to various causes.
Politely, I will say one last thing: Dealing with them is a big waste of time, I'll do nothing for those people and recommend against them.
You need to carefully balance your own interests, those of the company, the people you work with and those with whom you may have future dealings.
In this case you might reply that you've worked there X months and prefer to not give references for current employers. It's quick, truthful and honest (assuming you'd prefer not to answer).