Graphics aren't supposed to be ten times BETTER (more resolution), but ten times FASTER. Not probably an issue unless you are gaming, though. And Apple third party accessories have ALWAYS had to play catch-up to newer form factors (iPods, iPhones, you name it).

I would hesitate to call you out on this, but with a much faster processor, I would imagine you could either play more tracks, or get more polyphony from the Instruments in Garage Band. It's not that Garage Band CAN'T play on the older iPad, but that it is likely to be able to do MORE.

You know me, I NEVER tend to feel that upgrading from one generation to the next is usually a good idea. But I do tend to think that you might as well get the latest if it is your FIRST, as you are future-proofing yourself for at least one more generation on any cycle you choose to work around.

Get the iPad1, and you might be tempted to get the iPad3 in a year's time, as significantly better as it is likely to be. But get the iPad2, and you are probably good to go until at least the iPad4!