Disclosure:  I performed the following activities on my Windows 7 SP1 system, Visual Studio 2010 SP1 and a local Basic installation of TFS 2010.

As with any deployment of a service pack into a server environment, take your recommended precautions and be aware of the changes you are putting in.  With that said, make sure you backup your databases, and that you have an exit/rollback strategy in the event of an unexpected situation.

Team Foundation Server 2010 Service Pack 1 corresponds to KB2182621.  The KB article is http://support.microsoft.com/kb/2182621

The process will be very simple to follow, you will need to execute the mu_team_foundation_server_2010_sp1_x86_x64_651711.exe file.  That will extract files needed and launch the wizard driven Installation.

Once this process completes, you need to validate the changes.

By looking at Team Foundation Server 2010 Administration Console, you should see the reference to the KB number and SP1.

There is also a good reason to validate log locations and records. From the Team Foundation Server 2010 Administration Console.

Or from Windows Explorer, go to the C:\ProgramData\Microsoft\Team Foundation\Server Configuration\Logs location and review the logs referenced by the servicing references.