While Microsoft made big promises for Windows Vista slipstreaming (and then failed mightily), it really came through with Office 2007: All you need to do is extract the updates from the service pack and then copy them to the Updates folder in the Office install folder structure. (And then optionally burn it to disc, though I just keep it up on a network share.) And because Office service packs are cumulative, you only need the latest service pack.
Here's how you slipstream, or integrate, Office 2007 Service Pack 2 (SP2).
1. Download the standalone installer (290 MB). The filename is office2007sp2-kb953195-fullfile-en-us.exe in the US.
2. Create two folders in the root of your C: drive (or wherever) called Extract (C:\Extract) and Updates (C:\Updates).
3. Move the Office 2007 SP2 installer to the Extract folder.
4. Open a command line window (CMD) and type the following:
CD C:\Extract
office2007sp2-kb953195-fullfile-en-us.exe /extract:C:\Updates
5. Agree to the EULA and then close the Installer when completed.
6. Move the contents of the C:\Updates folder to the Updates folder in your Office 2007 install folder structure.
7. Optionally, burn it to disc.
When I originally installed SP2 it was on a machine that already had Office 2007, SP1, and a number of post-SP1 updates installed. So I just tested it on a clean Windows 7 RC machine to make sure the slipstreamed folder structure worked and that the resulting application version number matched what I saw with the version of Office + SP2 I previously installed. Seems to work just fine.