SP3 contains all of SP1 and SP2 plus a large number of additional security updates. In the future, no need for SP1 and SP2 just install SP3, it covers any thing earlier plus. As far as potential problems, depends on your MB, BIOS and system specs in general. Some older systems have issues. Generally speaking, if you have a modern MB and hardware, the chance of having any issues are small. There is no real performance increase in installing SP3. Personally, I have installed SP3 on maybe a dozen or more systems and had major issues with one older system. I upgraded that system to Vista and had no issues. You might want to back up any vitally important data before you update your system.