<p>We have a production machine and are trying to slowly introduce some 3.0 and up features on our web application. 3.5 is installed but I would like to upgrade to SP1, I would just like to know if it requires a restart of the machine in the end so I can schedule some down time.</p>

<p>Thanks!</p>

<p>EDIT: so it did require the restart, thanks guys for the answer...but the hosting company didn't give us the rights to do so...LOL</p>

He he.  I installed it on about 4 machines...two required a restart, two did not.  The configuration was similar between them, so there was no obvious way to determine why some needed a restart and others didn't.  The best theory I have currently is that the ones which needed restarts tended to be the ones which were more active (they were all running ASP.Net sites), so it is possible that the framework bits had not yet been loaded by IIS for the ones which did not need a restart.
To be safe, plan on restarting and schedule the update accordingly.