Although Microsoft has developed a habit of not including new features, Windows XP SP1 was an exception to that rule. It included support for USB 2.0 and included a nifty, government-required tool that will let you hide MS products, if you want. It also included support for other version of Windows, like Media Center and Windows Powered Smart Displays editions (codenames Freestyle and Mira, respectively). Windows XP SP1 also includes bug fixes and other general improvements.
SP1 should be available to download from Windows Update, but if you would like to order a CD or download the entire file, both can be obtained from Microsoft's website.
Windows XP Service Pack 2 is currently scheduled to come out during the summer of 2004. It currently is in beta testing.
Along with the usual bug fixes, Service Pack two will bring a number of new features to Windows XP. Most of the additions deal with security. Along with ushering in version 5 of Windows Update, SP2 also brings a more complex firewall. Internet Explorer is also more set to a more secure mode by default. The new version of IE will also include a pop-up blocker.
The taskbar has been overhauled (icon grouping), and a new uncluttered notification area. Only the recycle bin is on the desktop - the rest are kept in a new, larger start menu.