Windows XP and haven't yet taken the plunge to upgrade to XP Service Pack 3 despite the urgings of Microsoft's automatic Windows updates, it's probably worth doing it (e.g. to possibly improve battery life on laptops - see Microsoft's list of other SP3 fixes) - but, first, there's one gotcha with XP SP 3 that I want to highlight.
If your PC has an AMD processor (or possibly even other non-Intel processors), then you ought to check things out further before upgrading, because some people with AMD based computers (notably certain HP desktops) have had problems with continual rebooting / restarting of their computers, or a STOP: 0x0000007E error message etc after they tried to update their systems to SP3.
Here's a tip on that front: Jesper Johansson has provided a very useful free tool to download and doubleclick on your AMD computer to check if your particular PC suffers from this problem and, if it does, it offers to help you fix it.
Alternatively, install the KB953356 update direct from Microsoft before you try to install XP SP3.
If it's too late, if you've already tried to install XP SP 3 and been hit by what appears to be this problem, don't despair yet, you may still be able to fix it after the event - you could as part of your troubleshooting try the workarounds suggested by Microsoft involving disabling the intelppm driver.
For how to prevent or fix other potential issues with AMD motherboards and avoid other possible problems with upgrading to ServicePack 3, see Jesper's excellent post.