As the last response stated, it's quite a major upgrade to the operating system. The main focus of Service Pack 2 was security. There were some major security loopholes that Microsoft felt necessary to fix. If you want your OS to be more secure, I'd recommend installing SP2. You also can't get any other security updates through "Windows Update" unless you make the upgrade either.

As an aside, and for your possible amusement: I get to the internet by a dialup connection. I use XP. When Service Pack 2 came about, I thought it was "no big deal." I downloaded it over the phone line. 9 hours! Then quite awhile beyond that to apply it! Groan! From my mainframe days, I can also tell you that a Service Pack for an Operating System is about as close as you can come to a new release. It's a vast gathering of security updates, major rewrites, and even restructuring of the logic of the way the system works. I'm not privy to the Microsoft Operating System. I was privy to the VM operating system on the IBM mainframe. A service pack there involved rewriting the scheduler, which is a program which manages all the other programs going in and out of memory, giving them shares of time and usage of both the power and memory of the CPU. A service pack also involves installation of new security software, maybe even bulk updates and new strategies toward machine protections. Testing may have involved coordination of *all* these processes over some time, so that no one update or one small group of updates could have been parceled out in a small dose. Hence a service pack, all in one swell foop. It also supplied coordination of such strategies in updates to, say, Microsoft Office and other key products in the system architecture.