Windows 7 SP1 is now available and should install properly in most cases.  However, the “Early Issues” link below is beneficial to review and adjust settings as applicable to avoid potential issues

Windows 7 Service Pack 1 HOME

Windows 7 Service Pack 1 for IT Professionals

Internet Storm Center – Early issues

QUOTE: Right now, there is no urgent reason to install this service pack and it should be tested first. A few areas to watch:

Whitelisting / Blacklisting: Whitelisting software may not have checksums yet to verify all the files that are modified by the service pack. Same for anti-virus: Some anti virus products monitor system files for changes and may sound an alert or block the installation of SP 1

– Firewalls: Third party firewalls may find that some of the low level hooks they use have changed.

Disk Encryption: In particular full disk encryption that modifies the boot process may find that some of the changes it did are undone by the SP install

Custom hardware: If you are using drivers other then those that are included in Windows 7 (or 2008 R2), be careful.