In addition, the DHCP Server service should not be placed on an Active
Directory domain controller if this can be avoided. The reason for
this is because this changes security related to service locator
(SRV) records, which domain controllers are responsible for
publishing. SRV records detail the location of domain controller s,
Kerberos servers, and other servers, and the changes to the security
of these records when you install DHCP means that the records could
be altered by any client on the network. The reason this happens is
because DHCP servers must be able to update client records
dynamically if a client’s IP address changes. Because of this, they
are made members of the DNSUpdateProxy group, and members of this
group do not have any security applied to objects they create in the
DNS database. If you can’t avoid placing DHCP on a domain con-
troller, it is recommended that you remove the DHCP server from the
DNSUpdateProxy group. This should avoid the security problem outlined
here, but will also prevent the DHCP server from dynamically updating
client records in DNS when the client IP addresses change.
Source: "Windows Server 2003 Inside Out"