Earlier Microsoft had delayed the release of Windows XP SP3 through Windows Update due to some technical issue. Microsoft has announced that Window XP SP3 in now available through Windows Update. To install SP3 go to Windows Update and perform an express or custom install, make sure you see the service pack selected, and proceed with the install.
Windows XP SP3 will not significantly change the Windows XP experience as most of the changes are under the hood. SP3 will be available through Automatic Updates in a few months time.