“With Service Pack 1, Visual Studio 2008 introduces a large assortment of new features for targeting Windows, Office, and the Web. Developers building .NET-based applications will enjoy improved performance in the WPF designer, new components for Visual Basic and Visual C++, as well as an MFC-based Office 2007 Ribbon. Web developers will see continued improvement in the client-side script tooling including JavaScript IntelliSense. Additionally, full support for SQL Server 2008, the ADO.NET Entity Framework and performance improvements for the IDE make Service Pack 1 a great release across the board.
The .NET Framework 3.5 Service Pack 1 delivers more controls, a streamlined setup, improved start-up performance, and powerful new graphics features for client development and rich data scaffolding, improved AJAX support, and other improvements for Web development. Additionally it introduces the ADO.NET Entity Framework and ADO.NET Data Services, which simplify data access code in applications by providing an extensible, conceptual model for data from any data source and enabling this model to closely reflect business requirements.“
IF YOU HAVE INSTALLED SILVERLIGHT TOOLS make sure you remove them, and make sure you also remove KB949325. See Hanselman, ScottGu or here.