Every patch introduces new flaws as well as fixing old ones; the SP3 and hotfix introduce what I consider to be unacceptable flaws into Surveyor. SP3 itself introduces a bug in which Trainz locks up completely when saving a route and session at the same time (although they apparently save ok) and the hotfix introduces a bug where some Surveyor objects take a very long time to open. I just don't want to have anything to do with those, though I did do a basic SP3 installation for the purpose of participating in the DLS asset repair project going on which will be replaced with my full Trainz installation once it all is done.
Your mileage may vary and if you mainly drive then these bugs won't affect you. Even if you create routes, you might find them to simply be inconvenient, not a deal-breaker. I just don't find SP3 or the hotfix to be worth the headache.
As for running the patches, just go to the Auran Announcements forum, download the appropriate patch named for the current version of your Trainz and the number it is to be upgraded to, and download and run it, preferably as administrator on Vista or Win7 systems. If the patch doesn't automatically find the EXE file, use the Browse button to find your Trainz installation.