There were no improvements under the hood (though even the lowly Nokia Lumia 610 was fairly smooth on WP7.5, and still is), no OTA updates, you're stuck with Internet Explorer version 9 instead of the much zippier IE10 and apps created for WP8 won't work -- giving developers very little reason to create new ones for the lame duck OS, or even update existing ones.
ENGADGET: Windows Phone 7.8 hands-on: cosmetically yours Hands-on