Before XP, service packs used to be released about once a year. NT4 had about 7 service packs released for it, and Windows 2000 was on the same basic schedule until XP came along. Then some change in management at Microsoft saw the reduction in the number of service packs released. SP5 for Windows 2000 was canned, but really only in name. It was still released, just as a giant cumulative update for SP4.
I'm sure the thinking of someone in the marketing department at Microsoft, is that they already have a reputation for buggy and broken software, and a large number of service packs just makes it seem all the more broken. It also requires time on the part of developers who could be working on other things, that will hopefully lead to revenue for the company. Unfortunately, it's a huge disservice to people who use the software. Particularly people who run high availability servers that don't want to reboot the system every time some piddly little update comes out, because any amount of downtime is very costly to them. Service pack installs however, can be planned out well in advance, and you're maximizing the efficiency of the downtime by cramming a large number of updates into as small a window as possible.
To me, service packs don't have any sort of negative associations. I see them as a positive indication that work is being done to maintain the product. It says to me that Microsoft is trying to do right by its customers and fix outstanding issues with its products. You'd actually be hard pressed to find any other industry that does the same. If there's some defect with your brand new car, unless it's likely to result in lawsuits that would cost more than a recall, you're stuck with whatever that defect is. The software industry is really pretty unique in that it offers this continual improvement system.
Also, it seems Cnet is 2-3 days late with this story. Neowin broke it a while back, and The Register ran a story on it as well.
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