These folders r necessary if u'll want to uninstall these service packs in the future.
If u delete these folders, nothing will happen but u'll not be able to uninstall service packs ever!!!
So u can safely delete them if u don't want to uninstall service packs. And i think no1 will want to uninstall these Service packs...
hmm... but when u install from SlipStream XP SP2 installetion disk.... there isnt that option of Uninstalling SP2... so no question of tht 1GB taken up.... lol... so i have a advantage there....
when we install service pack, first the files r extracted to that folder n installed from there. once installed we can delete them (as they r nothin more than executables).
about installation may be using the same cd which we use to install will definitely give us options like "INSTALL,REPAIR,REMOVE" when used again.