...it may be true that it slows the system down.
After the initial slowdown, it will feel a bit slower as the update cleared out the drive indexing and needs to be rebuilt. This will take a bit of time but as you use your PC, it's "memory of locations" will get back to normal.
Directly from the horses mouth...
The Windows Vista SP1 install process clears the user-specific data that is used by Windows to optimize performance, which may make the system feel less responsive immediately after install. As the customer uses their SP1 PC, the system will be retrained over the course of a few hours or days and will return to the previous level of responsiveness.