In the 2007 version of the Deployment Wizard, there is a checkbox that says Group Policy Objects will be used to distribute the deployment. If this box is checked, then the contents of the service pack will be embedded into the deployment. If you leave this unchecked, then the service pack executable is simple added to the .INI file and is run separately after the deployment is installed.
The service pack must be embedded in the deployment when using GPO because only the MSI file is run in this case. Of course this also means you have to ensure that the other components normally installed by DEPLOY.EXE, such as Flash, DotNet, MDAC, and DirectX must to be installed PRIOR to pushing out AutoCAD via GPO.
Thanks to Nate Bartley for this information from his CM31-2 class at AU 2006.