Decent upgrades. Thinner, lighter, proper zippy dual-core processor, nine times the graphics performance, 1080p HDMI video output... all with the SAME battery life and price tag as the first iPad (with the battery probably making up most of the weight of the thing), FaceTime cameras... and probably a serious software upgrade in iOS 5 come June. Nothing spectacular but then it didn't have to be, they have a product that is selling VERY well and will probably now sell even more, especially given the poor competition so far. Those smart-covers are kinda cool, although the non-leather ones look a bit cheap.
The lack of a higher res screen is a slight bummer, but it's not like your average consumer will notice/care. It's an acceptable res for it's size and the LED IPS display is still higher quality than say, the Xoom's screen.