If you weren't going to get the first Kindle, you probably don't want the second version. The substantive criticisms--DRM, relatively slow screen refresh, skimpy non-ebook featureset--still remain. And of course, the very silly complaints of many tech bloggers, like adding a touch interface or color screen, have been completely ignored. This is an upgrade, not a completely new device. Do I recommend it to newcomers? Absolutely. Do you need it if you own the first one? Not necessarily.
Amazon has answered some of the criticisms of Kindle 1.0. The buttons are harder to press accidentally, the selection roller is gone, and it's a lot thinner. Basically, where the design of the original was meant to evoke a book, with angles for the "spine" and a planed right side that mimicked the fall of pages, the new device drops this pretense in favor of more artificial lines. Mostly this is for the better. I think the fuss over the original buttons was way overblown personally, and I sometimes miss their huge surface area, which made it easy to hold the Kindle in a variety of positions and still turn pages. But on the other hand, it's a lot lighter now, so the temptation to prop it up or lean it against something is less urgent.
The screen is noticeably faster, and it selectively updates whenever possible, so the fullscreen "flash" is minimized when not actually reading books. That said, it's still e-ink: slow, but very gentle on the eyes. I stare at a computer screen all day, and it's so relaxing to be able to read my e-books on the Kindle screen at the end of the day instead of on another LCD.
In getting rid of the roller wheel and "sparklevision" indicator on the right side, Amazon's had the chance to rethink the interface a bit. The Kindle 2 uses a joystick to move a cursor around the screen instead, and so it provides two more axes that can be used for control. For example, on the home screen, you can move up and down and select books as usual. Pressing left, however, will prompt to delete the selected book, and pressing right will open a navigation menu. Both actions used to take many more clicks, and a lot more time--they've added power without really increasing complexity, which is a good thing. Amazon also moved the wireless switch to software, which is a very good thing once you get used to it--the device prompts you to activate wireless when required, instead of just spitting back an error because the physical switch wasn't enabled. All in all, it's smoother.
They've said that the battery life is better, and I think that's definitely true. It's certainly much improved when it comes to going online--with the old Kindle, I tried not to turn wireless on without a charger handy, because the strain of the cell modem could wipe out a pretty good chunk of the power gauge. The Kindle 2 lasts longer with the wireless off, and it charges via USB, so that's one fewer power adapter I have to carry. Unfortunately, if the battery on a Kindle 1 starts to act up, you can replace it. The new one is built-in, a trend I don't particularly care for. I would have sacrificed a few millimeters for a user-accessible battery.
Since I wrote a review of the first Kindle, the supply situation has also changed. Nowadays, I can get a pretty good selection of what I want to read in digital form. I still buy a fair number of physical books, but fewer than I used to, and I'm arguably reading a lot more. Of course, you don't need the new hardware to benefit from that infrastructure, but it's good to keep in mind if you're thinking about joining up. Arguably, it's more important than any physical aspect of the product.
Here's the thing: like I said a while back, Amazon's big coup with Kindle isn't really about the reader, although that helps, and it's not really about the cost, for all the fuss that's made about it. It's the ease of the whole experience that makes it something special. A Kindle basically gives you a bookstore, a library, and a newstand wherever you go, in a package that fits in most bags or briefcases. If that idea doesn't make you salivate, then it's probably not for you. As a voracious reader, apartment-dweller, and traveler, I think it's a phenomenal device. The new Kindle only makes that better, and I don't regret buying it at all. But if you've got the original and you're happy with it, I wouldn't really say it's a required upgrade.
In conclusion, because I can't resist a cheap laugh, here's the Kindle 2's evil robot voice synthesizer reading from "A Briefer History of Time"--the only book where it will ever sound natural, I'm afraid.