Ready for HD
* GPU decoding on Windows Vista and 7, using DxVA2 for H.264, VC-1 and MPEG-2
* GPU decoding on GNU/Linux, using VAAPI for H.264, VC-1 and MPEG-2
* DSP decoding using OpenMax IL, for compatible embedded devices
* Improved support for MKV HD, including seeking fixes, and 7.1 channels codecs
* Support for new codecs, like Blu-Ray subtitles, MPEG-4 lossless and VP8
NB: so far, on Windows, VideoLAN is quite sad to be forced to recommend nVidia® GPU, until ATI® fixes their drivers on Windows, and until VLC developer get access to some Intel® hardware supporting GPU decoding.

Extensions
* New add-ons and script framework so one can personalize its vlc.
* Written in lua
* 2 main types of scripts:
- content add-ons, integrated in the playlist
- functionnalities extensions, like metadata searching on the web, or subtitles look-ups
* Very Simple

Web improvements
* Support for WebM decoding and encoding
* Improved web plugins
* Better streaming capabilities

Better Audio experience
* Integrated playlist in the Qt4 interface
* Multiple views (like album art) in the playlist in the Qt4 interface
* Support for AMR-NB, Mpeg-4 ALS, Vorbis 6.1/7.1, FLAC 6.1/7.1 and WMAS
* CDDB and CD-Text works now on the Windows port when listening to CD-Audio
* Support for DVD-Audio files (.aob)
* Improved meta-data and album-art support

Faster, Lighter
* Faster decoding, with up to 40% speed-ups, in HD resolutions
* First part of the Video Output core rewrite
* Removal or rewrite of dozens of modules, code simplification and tens of thousands of lines of code removed
* Some functionalities that are less used are now moved to extensions
* More assembly optimizatinons, especially SSSE3/SSE4 and ARM Neon
* Fewer threads used

Better for developers
* Simplified and improved libVLC, removal of exceptions for better C integration
* New phonon-backend for Qt applications, on all platforms* New C bindings