There is a full list of changes on the site. Basically the code was cleaned up a ton, a bunch of embed parameters were added (mute, volume, autoload), a ton of redundant code was removed, the slider works a lot better, it comes with a javascript tool to make the embed code, and it automatically gives the nofullscreen version to people with Flash player 8.
I’d recommend everyone who is using the old version update. If you don’t want to change to the new style of embed code, you can at least paste over your old swf file.
http://www.trenttompkins.com/Downloads/Open-Source-FLV-Player-2-Beta.html
Btw, what features would you guys like to see added to this player? I’m thinking the ability to have it load a still image on the first screen, and some easy embed functions for PHP.