On February 28, Microsoft started to distribute Service Pack 3 for Office 2003 via Microsoft Update. As, it's safer to avoid new software, including new bug fixes and new service packs (a big collection of bug fixes).
In the current issue* of the Windows Secrets newsletter, Susan Bradley points out a problem with service packs for Microsoft Office: there is no undo. If, for example, Service Pack 3 causes a problem, you can't roll back to Service Pack 2; instead, you have to uninstall Office 2003 and reinstall it.
In light of all this, I suggest the following for dealing with Office 2003 Service Pack 3:
Wait awhile to install it. The idea being, if something in the service pack causes a lot of grief, Microsoft may have a fix available by the time you need it. Service Pack 3 was first released four months ago, so I wouldn't expect big problems. Still, it will now be installed on many more computers, so something new may crop up. There is no right answer for how long to wait, but considering the service pack is not very new, I'd give it a couple weeks at least.
To prepare for problems, make a disk image backup of the entire Windows partition before installing the service pack. I'll have more to say about disk image backups in the future.
To prepare for reinstalling Office, make sure you can find your Office 2003 CD. For good luck, check that the disc is still readable, put it in a computer, and browse around a handful of folders. If Office 2003 was pre-installed on the computer and you don't have a CD, then you've learned a valuable lesson about buying pre-installed software.
Regardless of service packs, anyone running Office 2003 on Windows XP should.
Worst comes to worse, there's always the free OpenOffice.org.