Windows Update (and especially Microsoft Update) has been a bloated pig for years on XP. It regularly takes 20 min and a couple hundred MB of RAM churning every month here on our dinosaur machines (P4 2.4GHz with 512-1024MB RAM). I've always assumed it's grinding through some cache of files detailing every patch installed to determine which new ones to download, But whatever it is, it is not efficient about doing it.

I've never noticed an issue on my Vista or Win 7 machines at home though.