There are many different ways to optimize windows XP besides installing service pack. But now-a-days it is almost necessary to install service pack 2, because it has a lot of security updates. But you can directly install service pack 3. If you want speed optimization then there are many different softwares for it which fix the registry and other settings. For graphical improvements use bricopacks from http://www.crystalxp.net/ or use vista transformation pack. These two which I mentioned are free of charge. You can also buy window blinds. And you can use many registry tweaks.