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It seems work on Windows Vista’s first service pack is almost complete, with Microsoft planning to make the Release Candidate (RC) version publicly available next week via Microsoft’s Download Center. Microsoft commented that “the code has attained a significant level of performance and stability” and listed the following changes which have been made since the beta release:

• The size of the standalone installers have decreased significantly. For example, the standalone installer packages consisting of all 36 languages (x86 and x64 chip architectures) are smaller by over 50%. The standalone installer packages consisting of just the 5 languages (again, x86 and x64) slated for initial release are more than 30% smaller in size.
• The required amount of disc space for SP1 installation has also decreased significantly. Furthermore, with the RC, if more space is required to install SP1, an error message will now display exactly how much space is needed to complete the installation.
• Previous SP1 versions left behind a directory of files that wasn’t needed after installation and occupied about 1GB of space; the RC includes automatic disk clean-up to remove this directory.
• Installation reliability has been improved based on bug reports and error codes reported from Windows Update (thanks, Beta testers!). Testing shows that these improvements have significantly increased the proportion of successful installations of the RC.
• We’ve improved the user experience of installing SP1 via Windows Update. During the Beta release, users installed without much guidance from Windows Update. The RC now contains a series of screens with detailed information on SP1.

The final version of Vista SP1 is on target to be released during the first quarter of 2008 – roughly a year after the operating system was publicly launched.
Source: Windows Vista Team Blog