The Hero 2 takes 11mp photos and the Hero only shoots at 5mp, so that is a HUGE difference in image quality.
Also, when you are shooting in Burst mode, the Hero 2 takes10 frames a second where the Hero only takes 3 shots in Burst mode. When you are filming high-action sports, those extra shots make a huge difference.
And in time-lapse, the Hero 2 can take a photos every half-second compared to the Hero which can only take a photo every 1 second.
These factors make a big difference when it comes to capturing the right moment.
The lens on the Hero 2 is a lot clearer too and captures a wider field of view.
In my opinion, the Hero 2 is a much more powerful setup.