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The changes.txt in the docs part of the full 2.0.7 package points to these articles about the step from 1.x to 2.x:
Revised XOOPS RoadmapAnother RC4 Update(These are OLD - I do not want to see anyone posting a comment to these news items
)
The main points as I see them are:
1. Smarty (of course)
2. Debugging system
3. Image Manager
4. Configuration options were apparently saved in files in cache folders before, in the database in 2.x
5. The Object-ObjectHandler class structure was introduced
6. Notifications system
7. Better group permissions