Sync my contacts and calendar from outlook to iphone

You are on the right track.
You need to install the SBS 2003 SP2 package.
It contains Windows Server 2003 SP2 and Exchange 2003 SP2 along with other important updates. (It is a big download.)
Install all of the updates staring with Windows Server SP2.
Once you complete the install of Exchange SP2 your iPhone should sync.

FYI: If you use Remote Web Workplace you will need to forward TCP port 4125 on your firewall to your SBS server after this update or RWW won't work properly.

I hope this helps.