Service pack 2 is mainly just all the updates post service pack 1 in one massive update (mainly security patches) Think they rushed it's release due to the blaster worm , if you haven't got it installed then you best think of doing. Best practice to keep all softare updated regularly
Loads, its the biggest update they have ever done short of a new OS. Theres nowt major wrong now that will affect the general end user as far as I know. I've never had any bother, and recently upgraded machines at work with it (28 PCs) and not a single problem Deffo install it