Had a reply, it didn't post I guess. Anyways:
- A lot of newer drivers will require at least SP1 to install; some will require SP2/3. Check your dependencies there (also check for .NET and Visual C++ runtimes - especially for those ATi drivers) - if you need an SP for a driver, you need the SP.
- As far as games requiring them, nothing I can think of off-handedly, at least that's old enough to run well on an AthlonXP or GF4. Maybe something very new like Skyrim might though. It should say in the game's system requirements if it needs a certain SP.
- As far as performance differences and whatnot - there should be no appreciable difference between Home and Pro (they're very similar, especially for gaming), and as far as the SPs go with a newer/modern system SP3 is no problem, but on older systems SP2 and 3 can potentially be a problem as they add some additional services and take up a bit more memory while they're running. For a machine that's on the low end of running XP to start with (like a P2) it probably would be very noticeable, but for something like a P4 with 512MB+ RAM it shouldn't be a bother (my P4 has 1GB of RAM and runs SP2 and sits on the desktop with around 140MB of memory in use; my P3 running W2k uses around 130MB - I don't have any "tweaks" done on the XP machine aside from killing the Creative pop-up thing that came with the Audigy cards (which will eat up 150MB of RAM by itself)).
In terms of "snappiness" - I've never had an issue with even a P3 and 2k or XP - an AthlonXP or P4 should be no problem unless you load it up with a ton of modern stuff and associated web garbage. Just fresh installing XP and SP1-2 should not be a problem, especially if you disable most/all of the Security Center pop-ups (with no access to the open Internet you can more or less ignore all of that stuff). With a modern machine (like a Core 2 or something) SP3 + latest updates should be assumed. I know that a few months ago someone found an article doing gaming and application benchmarks between SP1, SP2, and SP3 and the results were usually negligible on relatively recent (like a P4) hardware. This is all I could find in a quick search: http://www.forevergeek.com/2004/10/windows_xp … nce_comparison/
.5% isn't even worth having a discussion about imho. But do watch the memory usage if you only have 64-128MB of memory would be my only suggestion (I remember on my P4 with either SP1 or no SPs I could get the memory usage under 100M on the desktop - with SP2 it goes whatever 30-40MB higher which doesn't matter for it (it has 1GB), but if it only had 128MB that's significant).