Yes, iPad 2 graphics are better BUT there hasn't been anything to really showcase the poser of the ipad2 yet. Just updating old games on ipad1 that look just as good as ipad2 game doesn't do ipad2 justice. For ex. Infinity blade. I couldn't tell ANY difference between the two. DeadSpace, now I saw a slight difference, with the ipad2 lighting in the game environment being better. The racing game, the ipad2 look brighter. Non of those are major overhauls of their respective games.
If u want to showcase the real power of the ipad2 gaming, developers need to start from scratch with more detailed artwork, etc..accounting for the extra graphics processing power. Right now, there is no night and day difference between ipad1 games and ipad2 games. Now I'm sure in the future there probaly will be cuz the ipad2 is a beast when it comes to graphics processing. It's beats out every other tablet or mobile device on the market right now. Can't wait till the "Real" ipad2 games start pouring in. Until then iPad 1 games can still hold their own as they are Great themselves.