http://support.microsoft.com/gp/lifesupsps
Read the above. Yes, its true, not a myth or anything. IF you are still not using XP SP2, this is a good time to consider moving on. If you are daring enough, go for Vista. But do expect 70% of your software will break.
For my poor friends who are still using dialup, you know who you are! You may want to pick up the SP2 CD from me.