The software it self is quite an improvement to the older iOS 4 and there are many new features, however I personally am not sure if it really has made that much of a difference...
Notification Centre
The notification centre is a big improvement from the previous way of iOS displaying notifications. It used to be that whilst you were watching an action film or in the middle of the last level of an app, a blue box would appear in the middle of the screen and everything would be paused. However now, a very discreet white bar appears in the top of the screen, and disappears after a couple of seconds. In addition, all of your notifications, be they email, calendar, reminders, messages etc. are all stored in the "notification centre" at the top of the screen. To access this, you swipe down from the top of your device, much like on android systems.
iMessage
To rival Blackberry's "BBM", Apple has introduced "iMessage". It is an instant messaging system across all iOS 5 devices which can be accessed from WiFi or 3G. An advantage is that it is free, and as long as your connected to a WiFi network, you don't have to pay internet charges. Across iMessage, you can send messages, photos and videos. Whats more is that you can set up group chats so that you can have a group conversation with all your friends who have iOS 5 devices. Another feature similair to BBM is that it tells you when someone is composing a message, and when your message has been sent. I frequently use iMessage now that I'm on iOS 5 and personally find it very useful.
Newsstand
Newsstand is one of the great improvements wih iOS 5, primarily for iPad users. iBooks already was a great reading app, where you could download many different book and read them at your leisure. However Newsstand is even greater, it has now brought newspapers and magazines to you in a whole different, interactive way. Since updating to iOS 5, I have downloaded a couple of newspapers and magazines, and I have been pleasantly surprised. When you want to download a newspaper or magazine, you go to a special branch of the app store where you can see all of the different publications for newsstand. Recently I have downloaded The Guardian and National Geographic Magazine. I have been most surprised by the fact that when downloading The Guardian it notified me that I have 78 free full issues remaining! This was a real bonus, as I expected to have to pay monumental amounts for it. The National Geographic Magazine is different however, all you get for free is the sampler issue which highlights the quality of the new way of reading the National Geographic Magazine. Reading magazines and newspapers is a lot more interactive, and intuitive with lots more things to tap, rotate, enlarge etc.
Safari
The final "major" improvement that has caught my attention is the "reading list" in safari. This is a way of viewing webpages, that is much easier than before. When you want to read a webpage or save it for later, you can add it to your "reading list". This means that you can read it without it being full of advertisements and other clutter... very useful.
In conclusion, I think that although there are many aspects of iOS that have improved, and features have been added, I am not fully convinced that it has really affected me that much. I think its main reason was to compete with other OS's such as android, since these already had many of the features that apple has just added.