In fact, there's only one iPad use case which entirely rules out the iPad 2 as an option--and that's if you intend to use your new tablet as an oversized still and/or video camera.
The iPad 2's rear-facing camera is lousy. It takes blurry photos little better than a non-smartphone's junky included camera. The new iPad's front-facing camera is unchanged from what you'll get in the iPad 2, but it's intended primarily for video chats. The rear-facing camera, on the other hand, is a 5-megapixel iSight camera. It won't measure up to what you'll find in an iPhone 4S, but it's certainly comparable to the iPhone 4's camera.
That said, an iPad makes an awkward camera: It's big, and holding it up to snap photos requires two hands. But if you expect to use your iPad for photography, spring for the new model.
How much storage do you plan on needing?
The iPad's storage isn't expandable: What you get when you buy the tablet is what you'll have for the rest of its life. As mentioned, the iPad 2 only offers 16GB of storage. The new iPad, on the other hand, is available in 16GB ($499), 32GB ($599), and 64GB ($699) sizes. If you plan to load your iPad up with not just oodles of apps, but also your full music library, a bunch of movies, and a heavy helping of photographs, 16GB may simply not cut it.
Thus, if you do expect to store all kinds of large media on your iPad, I wouldn't consider a 16GB iPad model acceptable anymore. That means your lowest-cost option is the $599 32GB new iPad. If you instead don't plan to store several gigabytes of music on your iPad--either because you plan to use iTunes Match, or sync no or little music--the 16GB size remains a viable option, which means you needn't cross the iPad 2 off your list just yet.
How much networking speed do you need?
If you're content with a Wi-Fi-only iPad, this question isn't relevant to you. But if you want a model that has the ability to connect to a cellular network, you'll need to consider the fact that the iPad 2 is only compatible with 3G networks.
The new iPad can connect with faster Long Term Evolution, or LTE, networks. This early version of fourth-generation (4G) cellular technology means faster, more efficient downloads, as my colleague Glenn Fleishman details in his look at LTE. And in his review of the new iPad, Jason Snell found that downloads and uploads over LTE gave Wi-Fi a run for their money. If you plan on connecting to a network with your iPad, the third-generation model and its LTE capability may be the way to go.
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