What Is In Service Pack 3
Windows XP SP3 includes all previously released Windows XP updates, including security updates and hotfixes, and select out-of-band releases. Windows XP SP2 was released in August 2004. Since then, Microsoft has released hundreds of updates. Windows XP SP3 includes all of these updates.
Microsoft is not adding significant Windows Vista functionality to Windows XP through SP3. However, SP3 does include Network Access Protection (NAP) to help organizations that use Windows XP to take advantage of new features in the Windows Server® 2008 operating system. Further, Windows XP SP3 does not include Windows Internet Explorer 7. For more information about Internet Explorer 7, visit http://www.microsoft.com/windows/products/winfamily/ie/default.mspx.


Knowledge Base article 936929 lists all other all Knowledge Base articles that Windows XP SP3 addresses. The following sections provide a high-level description of the functionality included in Windows XP SP3. For example, the service pack includes functionality previously released as updates, such as the Microsoft® Management Console (MMC) 3.0 and the Microsoft Core XML Services 6.0 (MSXML6). Users can download these updates and apply them individually to computers running Windows XP SP2. Windows XP SP3 also includes a small list of previously unavailable functionality, including NAP and an update of Windows Product Activation.

Great overview document here

More info about SP3 on TechNet Subscription:
http://technet.microsoft.com/en-gb/subscriptions/default.aspx