Data sheet: National Semiconductor Literature Number: SNIS159B, dated November 2000. As explained, in figure 4 there is a 75 Ohm resistor in series with a 1uF capacitor between Vout and Gnd. It also shows a 0.1uF capacitor as optional between Vdd and Gnd.
Do have a look at that LadyAda link I posted earlier. It shows how to use the LM35 with the arduino, and discusses how to make the result more accurate.