The 65,000 bugs rumor is very much overblown. The actual number of bugs in win2k is much lower, and most of them are simple syntatical errors, such as spelling errors in dialogue boxes.
I am running the RC of SP1 now, and I have noticed no changes, good or bad. Although the new slipstream install option is a GREAT improvement over SPs of the past. I have heard that most of the fixes in SP1 address issues in the server installs.