Yes it does count as service. Think of your notice as the requirement being to tell your employer 3 months before you intend to leave employment. It's about length of time, not what you are doing during that time.
I'm going to disagree about benefits though - you don't automatically keep all benefits during parental leave - you do accrue statutory holiday entitlement, but if your employer gives anything over and above statutory they don't have to allow you to accrue that, neither do they have to give you other contractual benefits like company car etc. It would depend on your contract of employment or the terms and conditions of your parental leave policy, or their discretion.
Sorry flowery is right re benefits. I was guilty of refering to my own experience rather than the actual facts <slaps wrist>
We used to leave all benefits in place because it was only 4 weeks at most and a more hassle on balance to remove and replace than leave alone. Your employer may be more enthusiastic about doing the admin!