I said I wouldn't buy a Kindle 2, as I already own a Kindle 1, and I made it a wh

ole five days. As one friend said, I'd make an awful POW. Fair point. However (this is where I try to justify my choice), my Kindle is probably my most used device, so upgrading isn't so silly.
I love my Kindle 1. I carry it with me in my purse at all times (ah, the benefits of being a woman). I read so much more since I got it. There were the obvious benefits of owning a Kindle (being able to carry multiple books at once), and then the less obvious benefits (being able to read one handed, easily purchasing books while on vacation, not having to buy books at airports).
I must admit though - in the first few hours owning the Kindle 2, it's a serious step up.
KeyboardThe once horrible keyboard is now merely mediocre. The Kindle 1's keys were quite stiff, whereas the Kindle 2's keys have a similar resistance as a mac keyboard. The keys are still awkwardly far apart, unfortunately.
And, now that the screen is faster, the keyboard now feels much faster as well.
CoverI'm not sure why Amazon didn't put more thought into the Kindle 1 cover, but they seem to have corrected the cover for the Kindle 2. The previous bulky case has been replaced with a trim, firm cover. The Kindle 1 would often slip from it's very lose case - the Kindle 2 locks in place almost like a seatbelt clasp. Snug and slim - perfect.
Underlining and HighlightingWhat was once a cumbersome process of fiddling with slow menus is now an intuitive selection process. Want to add a highlight? Move the cursor. Click. Move. Click again. Want to add a note? Just start typing.
Fewer Accidental ClicksThe "Next Page" button has been re-oriented so that you're less likely to accidentally hit it. Frankly, I didn't really have this problem after the first few days of owning the Kindle 1. However, it was a little annoying that every time you showed someone else the Kindle 1 they would turn your page. This has been fixed. This bigger benefit, to me, is that I probably don't need to put on the screen lock any more as things in my purse are less likely to turn the page.
Archived ItemsThe Archived Items (eg, old books stored on Amazon's servers) are now much easier to retrieve. The previous "Content Manager", which included all current and previous books, has been replaced with Archived Items - a simple listing of all your old books. By trimming it down to only what's _not_ on your device, it's much easier to find what you were looking for.
Look and FeelThe sharp edges (a significant issue when you're reading for long periods of time) have been replaced by rounded edges. The cheap plastic feel that reminded me of the old NES or a children's toy is now something that could have _almost_ been designed by Apple.
Overall, it's not perfect, but it's a big step up from what was already a great device.