Shader Model 3

Shader Model 3 added additional capabilities to shader model 2.

Feature Capability
Instruction Set
Register Set
Pixel Shader Max 512 minimum, and up to the number of slots in D3DCAPS9.MaxPixelShader30InstructionSlots (see D3DPSHADERCAPS2_0).
Vertex Shader Max 512 minimum, and up to the number of slots in D3DCAPS9.MaxVertexShader30InstructionSlots (see D3DCAPS9).
Shader Profiles ps_3_0, vs_3_0

 

For more details on model 3 shaders, see:

Shader Models vs Shader Profiles