To see a good overview of the new features, see Asymptomatic.
A big change is the ability to create categories on the fly, from the post page, with Ajax. This was previously a multi step process. Since Technorati and other blog search engines view categories as synonyms to tags, this is a quick way for most users to quickly and easily tag their posts without adding additional code.
Another big improvement is the enhanced “view post preview” function. This shows the post exactly as it will look on the blog, with all formatting and CSS that will be applied. This is a welcome feature.
They’ve also added a wysiwyg rich text editor. I disabled this immediately, although many users will like it.
Now for the bad. The new image uploader is a train wreck. Yes, they’ve moved it to the post page which removes a click. However, what took a couple of steps before now takes five or six because I format images in a very particular way which the uploader doesn’t support. It also has default settings, like thumbnails, that require extra clicks to get This needs to be fixed or I will literally go crazy. At the very least, just showing me the URL string for the uploaded image will get me back some of the functionality lost.
The image URL folder is now reset every month as well, and so I can’t easily find old images, either. They didn’t think through this very well, or at all.
Transition took a few days (yes, days) before comments and images were showing properly (thank you, Bryan, for doing this) The support site provides some help, but the depth of questions and obvious user frustration shows that many, including me, should have tested it out before transitioning our entire blog there.