Dinesh wrote a blogpost about .NET Framework 3.5 SP1: LINQ perf improvements (LINQ to Objects and LINQ to SQL). There are three perf improvements in the just released SP1

Specialized enumerable: The new implementation recognizes queries that apply Where and/or Select to arrays or Lists and fold pipelines of multiple enumerable objects into single specialized enumerables. This produces substantial improvement in base overhead of common LINQ to Objects queries (at times 30+%).

Make sure to check it out!