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. Further, Windows XP SP3 does not include Windows Internet Explorer 7.
Windows XP SP3 also includes a small list of previously unavailable functionality, including NAP and an update of Windows Product Activation.