I just purchased the new ipad ( 16Gb) for my wife (she used iPad I) . I was thinking about iPad 2 but when I compared the new iPad side-by-side with ipad 2 in my local Bestbuy store, I never looked back ipad 2.
I also compared iPad 2 with my original ipad and they look the same in display performance. However, the difference between ipad 2012 and ipad 2 is huge, I would say you will immediately notice the difference like day and night! What's a huge improvement. Apple does the great job.
I read a lot on tablet, ( we buy tablet to read, don't we?), so retina display is so important to me. Everything appears on the screen is much better, including sharpness/colors of pictures and letters.
The retina display alone is worth $100 difference between the two generations, IMO.
I sold my Android tablet and thinking ablout selling or giving my original ipad ( 3G) as well to buy another ipad 2012. I made a right decision to buy the new ipad for her. After looking on the retina display, I don't look elsewhere.
BTW, I don't have any issue with heating as some people complain. I watch Netflix movies and I think heating is in normal level even the ipad is enclosed by a leather case.
Better graphic display, warmer the unit is and longer to charger the battery.
If you can't spend much, then get 16G but I think ipad 3 is the way to go.