After a fairly long development and testing period, Microsoft has released Service Pack 3 for SQL Server 2005. Initially, Microsoft was considering not developing an SP3 release, since they are trying to convert more of their products to an incremental servicing model that uses Cumulative Updates that are released more frequently than Service Packs. So far, Microsoft has been very good about getting cumulative updates released on schedule, every eight weeks for both SQL Server 2005 and 2008. Even so, there was still a lot of pressure from ISVs, VARs, and the SQL MVP community for Microsoft to release SP3 for SQL Server 2005, which they have done.
Microsoft Service Packs get more testing than Cumulative Updates, so ISVs and VARs feel more comfortable certifying their product or solution to work with a Service Pack instead of a Cumulative Update. Having SP3 available will save every day DBAs time, since they can install the RTM bits, and then just install SP3 (and CU1 for SP3), rather than having to install SP2 and then install CU11.
Microsoft has also released CU11 for SQL Server 2005 SP2. It turns out that SP3 includes all fixes through SP2 CU9. If you have SP2 CU10 or CU11 installed, you can install SP3, but then you will need to install CU1 for SP3 to be current. As Microsoft puts it":
“For customers who will be upgrading from SQL Server 2005 SP2 CU#10 or SP2 CU#11, you will have to install the latest CU on SP3 after upgrading to SP3 release to get all the fixes.”
Glenn Berry's SQL Server Performance 