Panzer,
There are a few differences, but the most prominent is the Commander's Independent Targeting system. The CIT allows the commander to actively look for targets, lock on to them and compute a firing solution independent of the gunner's sight, allowing the gunner to concentrate on one target while the commander looks for the next one. Once the gunner fires on the first, the gun automatically lays on the commander's next selected target. Its probably more complex than that, but as I haven't gone to Armor school yet, I'm just going on what I've been told. I'll get back to you in 2 years after I've completed my M1A2 training!
That's the major difference. You can tell visually by looking at the top left side of the turret ahead of the loader's hatch. There will be a sensor turret there on an M1A2, but just a flat circlular plate on an M1A1.
From what I've seen on the news and elsewhere, the Marines were the only ones to use the M1A2 in combat this time around. The pics I've seen have the old circular guard on the outside of the drive sprocket too, which makes me think they were originally M1s or IPM1s. The 4th ID's M1A2s weren't offloaded fast enough (thanks Turkey!) and missed out on the action. I'm not sure about the 64th Armor of the 1st ID up north. They may have M1A2s and may have seen some action. Very little has been reported on them.
There are subtler differences like the new smoke mortars (2 banks of 4 per side instead of the old inverted pyramid type with six rounds), and a change in the .50 caliber machine gun mounting. The commander used to be able to fire it from inside or outside the tank. Now its only fireable from the outside.
Hope I've covered everything. If anyone else can think of something I've forgotten, sound off!