In my windows 2003 server suddenly error appear "SVCHOST.EXE HAS GENERATED ERROR AND WILL CLOSED BY WINDOWS", Than all terminals disconnect and user cannot access network files and folder.
You need to make sure that your system is cleaned from all malware and viruses as there are many different operations of svchost that can run on a computer. Malware and viruses sometimes hide behind this file name to protect themselves from being removed.