CERT (the Computer Emergency Readiness Team) made it little more official this week and issued a Cyber Security Alert [SA04-243A] recommending that computer users upgrade to Windows XP SP2.

Taken from the US-CERT web site alert:

Recommendation

To help protect your Windows XP computer from attacks and vulnerabilities, install Service Pack 2 using Windows Update or Automatic Updates.

Note: Service Pack 2 makes significant changes to improve the security of Windows XP, and these changes may have negative effects on some programs and Windows functionality. Before you install Service Pack 2, back up your important data and consult your computer manufacturer's web site for information about Service Pack 2.

The recommendation is made specifically for home users, which stand to see the highest benefit, but applies in principle to businesses as well. However, note that many business computing environments are centrally managed. If you work in a company that has centrally-managed software and security procedures, be sure to check in with those people before you install SP2 - they may already have a plan in place.