While Windows Vista SP2 comes with a whole load of improvements and fixes, Microsoft listed the most important ones for us in a handy overview page at TechNet. A lot of work has gone into improving support for WiFi and BlueTooth 2.1, and they also added the ID and vendor strings for VIA's new processors. It also comes with Blu-Ray recording technology and Windows Search 4.0, which comes with improved performance and more relevant search results.
For Windows Server 2008 customers, there's also a list of improvements. Hyper-V will now be a part of Windows Server 2008, instead of it being a separate download, turning it into a "fully integrated feature", " including one free instance with Windows Server 2008 Standard, four free instances with Windows Server 2008 Enterprise and an unlimited number of free instances with Windows Server 2008 Datacenter." Other changes include improvements in WebDAV, power management, and more.
The service pack comes in a single package which will work on both Windows Vista and Server 2008. There's a 32bit version and a 64bit version. Note that SP1 is a pre-requisite before installing SP2 (SP1 came integrated on Server 2008). In addition, people who used vLite to alter their base Windows installation may not be able to install Service Pack 2 because required components may have been removed. There's a "workaround": happy re-installing.