What is it?
Service Host Process - svchost.exe

What does it do?

Here's a direct quote from MS about this: (source)
Svchost.exe is a generic host process name for services that are run from dynamic-link libraries (DLLs). The Svchost.exe file is located in the %SystemRoot%System32 folder. At startup, Svchost.exe checks the services portion of the registry to construct a list of services that it needs to load. There can be multiple instances of Svchost.exe running at the same time. Each Svchost.exe session can contain a grouping of services, so that separate services can be run depending on how and where Svchost.exe is started. This allows for better control and debugging.

Svchost.exe groups are identified in the following registry key:

HKEY_LOCAL_MACHINESoftwareMicrosoftWindows NTCurrentVersionSvchost

Each value under this key represents a separate Svchost group and is displayed as a separate instance when you are viewing active processes. Each value is a REG_MULTI_SZ value and contains the services that run under that Svchost group. Each Svchost group can contain one or more service_names extracted from the following registry key, whose Parameters key contains a ServiceDLL value:

HKEY_LOCAL_MACHINESystemCurrentControlSetServicesService

If you're running Windows XP Home edition then you'll have to download this file HERE and put it in your windows/system32 directory. If you're running XP Pro then you won't need that file since you already have it.

1.) Start --> Run --> cmd
2.) Tasklist /svc >C:ianaginfo.txt

Here's an example of what I got when I issued this command if you'd like to take a look at an example.

A Description of Svchost.exe in Windows XP:
http://support.microsoft.com/?kbid=314056

More Info
More Info

Virus Precaution:
The original file from Microsoft gets placed in the Located in C:WINDOWSSystem32 directory. If you find it anywhere else then you should be suspicious for sure.

You'll want to keep an eye on this google search for any known viruses.