SP3 gave my XP system a significant speed boost. That was a pleasant surprise.
Bookmark
I waited until it had been out 6 months, then installed SP3 on our 3 WinXP machines. They all work fine — zip, zero, nada problems.
However, I always have automatic updates turned off, and pick and choose what and when to download. We still use Windows Media Player 10 (much better than 11, which is a piece of crap), and IE6 (IE6 works fine, so no thanks to IE7).