My son LOVES LOVES LOVES his Leapster! We got it for him last Christmas, and it is honestly one of the best things we have ever bought him! He has most of the games that are pre-school age (got them as gifts for Christmas and birthday), and there isn't a single one that I don't like. They are SO educational, but he has a blast playing with it!
We do limit his Leapster time, but I think we did it the right way. He is rarely (as in every other week or less) allowed to play the Leapster in the house. He plays it when we are in the car, at the mall, grocery shopping, etc. Not only does it keep him from being a couch potato at home during the day, but it distracts him so I am able to get my shopping done with no hassle! It really is a win win for both of us!
I don't remember the difference between them, but I'm pretty sure my son has the Leapster 2 (which is the newer one). I cannot say enough good things about them, and I highly recommend getting one. Educational + fun + a great diversion = happy mommy!