When Microsoft released Service Pack 2 in August, I recommended that most users hold off before installing it. That advice turned out to be extremely sage advice. Stories of problems or even nightmares after attempting the upgrade abound. At the same time, I mentioned that the update would eventually have to be installed and should be installed.
Enough time has elapsed since Service Pack 2 (SP2) initial salvo for me to gain some important insight on how to minimize or eliminate the problems with doing the upgrade. Here are my recommendations.

• Visit your computer manufacturer's web site (especially
  HP) and read their recommendations about the SP2 upgrade.

• Order the SP2 CD by clicking here [1]. It's free.

• Roxio EZ CD Creator 5 users should uninstall Roxio
  before updating and I recommend upgrading to the newest Roxio after the
  upgrade.
• Norton AntiVirus users should uninstall Norton before
  updating.

• McAfee users should do the same.

• Also, uninstall any third party firewalls.
• Run a complete system scan on your computer, in Safe
  Mode, using AdAware or SpyBot Search & Destroy.
• Backup all of your important data.
• Disconnect your system from the Internet.

• Run the SP2 update. Be patient, because on some
  computers the upgrade can approach an hour or more to install.

• When complete, reinstall your firewall and anti-virus
  programs.

Because of the myriad of computer configurations and software combinations, I can't guarantee that following these steps will be fool proof.  But I am confident that IF you follow these steps, your upgrade will go smoother than if you did no preparation at all.
Unfortunately, computer hackers the world over placed a large target on Windows XP. Windows XP continues to be a stable and capable operating system, but we must become extremely involved in keeping our systems protected. SP2 helps secure the platform better and is an essential upgrade. However, it still doesn't take our involvement out of the process of protecting our computers.
Continue to monitor your anti-virus system, install and run anti-spyware programs (DO NOT pay for any of them), run a second firewall if you are a broadband user, and strongly consider using an alternative browser like Opera or Mozilla Firefox.