I'm running Windows XP SP 2 RC1 now, and I've already logged a handful of bugs -- mostly against the new IE security settings 🙂 -- but I haven't had any problems yet. (Well, my tablet froze on me last night, but it hasn't happened again so I don't know what the cause was). You should visit the download page now, try it out, report any bugs, and check if your in-house or 3rd Party LOB applications work with it, especially any apps that use network connectivity or reuse the browser control. Obviously you should not install Beta-quality software on production machines, but it should be safe on your normal desktop or laptop if you can afford to re-image it in the face of an (unlikely) disaster.
One annoying thing is that the cross-domain link checking they do (which is in theory a good thing) gets very annoying very fast - I can't click on a link from Google (Internet Zone) to Microsoft (Trusted Zone) without a warning prompt. There appears to be a setting for this with the usual Enable / Disable / Prompt choice, so I'm hoping the bug is just that they don't honour that setting in the RC and that in the final release they will not prompt if you put it at "Enable." This feature also appears to completely break any custom zones you may have set up, but as I said in my blog they are not really supported. I hope the IE team still enables them in the final version though as the custom zones are very useful.
Other than that, most of the changes don't visibly affect me because I ran a pretty locked-down machine anyway.
One of the really cool things about SP 2 is that if you have a Tablet PC, you get the new "Lonestar" version of the Tablet OS. It has the new "write anywhere" input panel which makes it much easier to input text into applications, and it does cool stuff like show you previews of text before you send it to the application, it has much better per-letter correction UX, and the input panel "grows" as you write more text. They've also gone with an Office 2003-ish "orange gradient" theme 🙂 (Oh and it now recognises smiley faces, which was one of my biggest pet peeves about the old version)
They've implemented some of the Pocket PC gestures (eg to insert a new-line) but they only work in isolation and I still miss the "upstroke" to change the capitalisation of a letter or the selected text.
Writing is still much slower than typing (if for no other reason than the mechanics of the human body and the efficiency of pen strokes vs key presses), but this is a lot better than before. I've actually managed to write this entire blog in ink without getting horribly frustrated!