Town had a miserable 2006, finishing in their lowest league position in 40 years and have spent most of the current season in the bottom half of the table too.
However, recent performances have suggested an upturn in fortunes could be on the way, and this fine win against the leaders - ending their six-game unbeaten run - could kick-start a better second half of the season.
Birmingham battled away well and could have snatched it on another day, but they spent most of the match on the back foot and few of their travelling support could deny it was a fair outcome.
Ipswich started in lively fashion with recalled Billy Clarke forcing a good diving save out of Maik Taylor with a curling shot and then lifting a 30-yarder over the crossbar.
Town were unlucky on ten minutes when Clarke played in Matt Richards who was tackled on the edge of the box, but the ball fell perfectly for Gary Roberts whose inch-perfect curler crashed back off the bar.
At the other end, Dudley Campbell rounded Lewis Price, but Dan Harding was back to clear before Campbell volleyed well over from 20 yards and then Fabrice Muamba volleyed over from a Gary McSheffrey pass.
Ipswich were ruing their bad luck again on 27 minutes when both Richard Naylor and Sylvain Legwinski had headers cleared off the line after a Roberts corner caused havoc.
Alan Lee was denied by Taylor before Birmingham struck the woodwork on 38 minutes when Nicklas Bendtner thumped a fierce header against the bar from Stephen Kelly's deep cross.
The second half began slowly before Matthew Sadler was in the right place again from a Richards corner to clear a Clarke toe-poke off the goalline.
McSheffrey blazed a 20-yarder over for the visitors before Sadler effected his third goalline clearance of the day when he denied another Naylor header from a Richards corner.
Richards had a great chance after Roberts fed a clever ball into his path on 70 minutes but the diminutive midfielder completely missed his kick 12 yards out with just Taylor to beat.
Price produced the save of the game on 73 minutes to deny a low Bendtner shot after a poor back pass by Alex Bruce, son of Birmingham boss Steve, was seized on by sub Seb Larsson.
Birmingham were fortunate not to go down to ten men on 80 minutes when Sadler, booked in the first half for hauling down Roberts, tripped Lee, but ref Andy D'Urso, after initially going for his pocket, decided to give him a final warning instead.
D'Urso left the Town fans further aggrieved two minutes later when he rejected a good penalty shout when Martin Taylor's raised hand blocked Naylor's goal-bound flick, with Williams blazing a good chance wide from the rebound.
It looked as if it wasn't going to be Ipswich's day until they finally broke through a minute from the end of normal time.
But then Legwinski won a crucial tackle on the halfway line and fed Lee who picked out Roberts on the left wing and his curling cross was perfect for Williams who coolly volleyed low beyond Taylor at the far post.