Well we all have been waiting a long time for it and finally it is here; Visual Studio 2008 SP1. With many improvements and some new features it seems to be more than just a service pack but an evolution to your coding experience.
Some of the big improvements I should mention are those around the .Net framework and how WPF applications see a significant performance increase (~30%!!) Also the footprint for some applications will be reduced with the introduction of Profiles that will remove any excess .Net functionality that isn't needed.
Finally WPF will also see the introduction of a web browser control however it is handle based from a standard browser control and thus doesn't yet support some of the WPF goodies... how cool would it be to do 3D transformations to a webpage!