Here's my 2 cents:

In my opinion, the best improvement is the Excel binary format: a new,
compressed file format which lets you save plenty of space. In fact,
zipping an excel binary format usually saves no more than 1% of its
size.

Other improvements:
- easier access to a SQL server in ODBC connections
- more powerful pivot tables
- new table format, which makes Excel - finally! more similar to a
database: field names can be assigned, formulas can be defined
directly for a whole field, etc

Cons:
- the new interface. Some love it, some hate it. I hate it. Even if
you love it, though, it will take a while to get used to it
- VBA: some stuff has changed, and some code that used to work in
Excel 2003 no longer does in Excel 2007. The problem is, many changes
are not even documented so you'll discover the hard way!
- speed: I find the new bells and whistles make 2007 much slower than
its predecessors
- new limit of 1 million rows. Many people find this an improvement; I
don't, because spreadsheets are not meant to handle this much data.
This 'enhancement' will simply mean that fewer people willl bother
learning a database, even if they should, and in many organizations
people will use Excel to handle this much data, which is not optimal
at all