The folks at Instagram know they have an excellent app. It's functional as hell and it's growing like crazy. There's no need to change the formula. So for their second official release, they've just made everything more awesome.
Instagram doesn't make any really staggering UI changes with the release of 2.0, and that's a good thing. They didn't need to. But what they could improve, they did so brilliantly. Most of those improvements hang out in the camera function. In addition to four new filters—courtesy of @colerise—you can now filter your images WHILE you frame the shot. You don't even need to worry about the app lagging while you select a filter. It's super quick. The tilt-shift feature is also much more robust, giving you better control of what's in and out of focus. And the pics you take are now high-res, set at an incredible 1936x1936 pixels—perfect for sharing on Photo Stream. The only thing lacking is that you stiiiill can't tag your photos with metadata to make them searchable, but its a minor nitpick.
Hell, they even redid the icon to make it stand out a little more. Other photo apps REALLY need to step their game up if they even hope to compete. But yeah... where are you, Android version? [Instagram Blog]