Microsoft Windows 2000 SP2 and MetaFrame 1.8 SP3, plus the latest hotfixes from WindowsUpdate.com are what we use in our older (non XP) production servers - and they are fine. When building, apply all MS hotfixes in change user /install mode before adding MetaFrame. Do this for IE as well as the O/S.
In fact, if you're doing a rebuild, I would suggest doing a round of testing on "Pure" Terminal Services, sorting out any issues that crop up, and imaging a server before re-installing MetaFrame. If the image is reliable, and the server hardware identical, you can then simply re-create the other servers from that image, and rollout in a gradual, controlled fashion.
I Hope this helps CitrixEngineer@yahoo.co.uk