Microsoft seems to be running into some issue with it's recent patches.
This one impacts Windows XP and Windows Server 2003 systems.
I first saw mention of this particular issue when reading the ISC-SANS handler's diary: Mailbag: MS Patches / Symantec Vuln
When some users fire up Windows Update to scan for updates that utilize the Windows Installer (including Office updates), the CPU utilization rate for svchost.exe can lock on 100% for extended time frames.
I'd recommend carefully going over and using the detailed links and instructions over at WSUS Product Team Blog post: Svchost /MSI issue follow up.
It’s important to note that with the MSI fix and the new client installed, the CPU may still go near 100%, but the system should still be responsive and not lock up. If another task requires CPU cycles they will be shared, but if the system is idle, MSI will use the full cycles available. If a task is running at the same time as MSI, the system may be slightly slower, but should still be responsive during this time. Key to remember the MSI fix and the new client address unresponsive or locked systems. CPU spikes during some scans are expected, machine unresponsiveness is not. If your watching the process monitor, you will still see 100% CPU during some scans and this is expected behavior.
The WUUS version 3.0 will be mass-released on May 22, but you can get it early using the links I've referenced. If you aren't having any issues, I wouldn't recommend applying this fixes early. And in some cases, users are reporting that this fix isn't helping at all.
Microsoft Updating can be a bit of a mysterious process.
More reference linkage on the issue:
Fix for Microsoft Automatic Updates not working - Via InfoWorld
Microsoft's fix for Automatic Updates lockup not working - Via ComputerWorld
Fix for 100% CPU usage of svchost.exe has been updated but user need WSUS 3.0 too - Via Donna's SecurityFlash
Microsoft WSUS Team test Hotfix KB927891 and WSUS 3.0- Via Donna's SecurityFlash
Determining the Current Version of WUA - Via MSDN
Update on svchost/msi performance issue and 3.0 Client distribution plan - Via WSUS Product Team Blog