Forms is replaced with XForms (http://www.w3.org/TR/xforms).Events are replaced with XML Events (http://www.w3.org/TR/xml-evens).Frames (not in 1.1 at all) are implemented via XFrames (http://www.w3.org/TR/XFrames when it is published - might not be there yet).[Some points elided -cm]Tables has a more normalized content model.Applet is gone - use object.Img is gone - use object.
My prediction of the day. XHTML 2.0 will be the HTML's dead-end. In five years time, people will still be writing tag soup in HTML4 transitional, because thanks XHTML's march into complexity, the option to move to something cleaner will just not be there for them.
Modularity is wonderful. In theory it allows you to only concentrate on the bits of XHTML that you need to know about. But the simple fact is, to write a web-page you're going to need to use something like 14 of the 16 modules in XHTML 2.0, plus XForms, so what's the point of splitting them up again? And, of course, once you start splitting the spec up like that, tracking HTML versions is going to be a big game of mix and match.
(That said, my weblog is HTML4 transitional tag soup because I'm too lazy to write my own template)
