It has the A5 chip
It's up to 2x faster than before, with dual-core graphics, which are said to be seven times faster than previous iPhone.
it can now intelligently switch between the two antennas between transmit and receive."
Theoretical download speeds are now twice, 14.4Mbps versus 7.2 on the iPhone 4.
Camera is now an eight megapixel sensor. that's 3264 x 2448.
There's an IR filter on there too for better, more accurate colors.
1080p video recording
AirPlay Mirroring is now happening, meaning you can get your gaming on the big(ger) screen.