As others have mentioned I think the biggest improvements are to ACR and the Bridge. If you use ACR for RAW processing CS2 is a big improvement. The Bridge is faster and much more capable than the CS file browser. Things like filmstrip mode and the slideshow have pretty much eliminated the need to use another application for initial image review and culling for me. 16-bit filter support has been expanded, also the merge to HDR feature should be useful for high dynamic-range landscape images though I haven't used this too much yet but plan to in the future.
IMHO the new tools in Photoshop are nothing to get excited about. The spot healing brush isn't revolutionary, it just decides where to sample from on it's own saving you from having to alt-click. But sometimes it will decide poorly so I often have to revert to using the regular healing brush. Likewise I've found the new red-eye tool to be just about worthless, I get much better results with the color replacement tool. I can't see myself ever using vanishing point tool or smart objects, since I don't do montages or illustration type stuff. The one tool I do find myself using a lot is the Lens Correction tool, albeit not for the primary intended purpose. I use the vignette control to add a vigetting to portraits; it's very easy and works quite well.
As for stability and performance, CS2 seems to be an improvement. The Bridge has yet to "lose" the image preview data for folders the way the CS File Browser always did, probably because you can configure it to use external file caches by default. Photoshop itself seems a bit snappier, it doesn't get bogged down editing 16-bit images the way CS often did. My only complaint is that when you have both PS and the Bridge open there are sometimes some "synchronization" issues. I'll occasionally get an error when saving a file saying the file is already open, and have to try saving it again. It seems like PS creates a temp file for the save, but then the Bridge sneaks in and tries to add it to the cache before PS has a chance to rename it. Also sometimes when you save a file it won't show up in the Bridge until you change to a different folder and then back to the original. That's really the only stability problem I've had though, overall it's definitely better than CS.