The major changes between Media 1.x and 2.x so far are the following:
- The File entity module which provides most of the underlying API has been moved to its own project at http://drupal.org/project/file_entity. When updating from 1.x to 2.x you'll need to ensure you download and enable this module separately. You will also need to ensure that the file_entity module included in the Media module directory is removed on update.
- The Library tab in the Media browser is being converted to a Views-powered tab named 'Views library' enabled by default. The old library tab which is deprecated is named 'Library'. This means that Views is now a dependency for 2.x as well.
- You can change which Media browser tabs appear for a field using the 'Media file selector' widget. For example, for a specific file field on your article content type, you can specify that only the 'Upload' tab can be visible. See http://www.youtube.com/watch?v=xHbTFID5tvE for how to configure this feature.
- The 'Multimedia asset' field has been deprecated and moved to its own sub-module. Site builders are recommended to use the core Image and File fields for handling file and media (and use the 'Media file selector widget for those fields) rather than using 'Multimedia asset' fields.
- The media widget for 2.x includes an 'Edit media' button which allows users to edit the fields on the selected file in a CTools modal window.