The new features are beta, and are not yet fully integrated with the existing system, but as the Blogger Help overview reveals, there is plenty of new stuff happening at Blogger. Some of the upgrades are "backroom" changes, and others will be visible to Blogger users and to your readers. There are five significant changes:
1. Dynamic Serving: Dynamic "on the fly" serving of blog content for Blogspot hosted blogs. No more lengthy republishing process or building of multiple static pages. "Dynamic Serving" means that your edits are instantly saved in a database, and the page that the edits appear on isn't built until someone tries to look at it. Think of that! Make changes across your whole site as quick as a click.
2. Private Blogs: Blogger's new Access Control Settings will enable you to keep a private blog, viewable only by selected Google account holders that you've approved.

Folks who you invite by e-mail will be able to view your blog whenever they're logged into their Google account. Failing that, they'll be able to get hooked on your blog by viewing it as a guest for 2 weeks (from a link in your e-mail). The author of a private blog will be able to delete readers off the list of approved accounts.
3. Categories / Labels: We've asked for categories pretty consistently, and developed 30+ variations on methods for working around the omission. Well... Someone was listening, because Blogger Beta has Labels, which I guess puts us out of a job, kids!

4. Drag & Drop Page Editing: Labels will require the use of Layouts, which is the new drag & drop WYSIWYG template editor. This will probably open up a world of custom template fun, but currently requires you to select a default template.

For more, check out the Layout Guide, & the guide to Fonts & Colors

5. Choice of Feeds: This new version of Blogger also offers a much richer set of options for syndication and feeds. You'll be able to choose between Atom 1.0 and RSS 2.0, or make use of an advanced feed mode. What's so advanced? That would be comment feeds!

In addition, there's a redesigned dashboard:

It appears that the navbar will find a purpose, and double as an admin console when you're logged in:

There's also the promise of much more to come..... Not that it's all fluffy clouds and such. There are some known issues, the most significant of which is an incompatibility of old accounts with new blogs for comments:
Users who have not switched to Blogger in beta will not be able to login to comment on blogs that have been switched. Commenting using the "anonymous" or "other" options will still work.To see whether you can take the blue pill and go down the rabbit hole. See Blogger Help once again. If you have the option to signon to Blogger w/ a Gmail account, do so. After you're signed in, Select the "switch now" link in the top right of the page to jump to Blogger beta. Look for the "switch in two steps" box.

If you're able to get to the goodies, you'll see step 2 and your account will roll over to a Google account, you'll accept the new TOS, and your new start URL will be beta.blogger.com. If not, you'll be cruelly shut down & cut off in your prime, as I was. (weeps softly...) Freshblog isn't eligible to migrate in the first wave because we're a team blog.
Does that mean we can't play? No... See Pete in the comments again. There's nothing to stop you from creating a new blog in the beta to go with your gmail account, and then integrating it back into a single Blogger account at a later point. For more on the integration of accounts, see the pre-emptive Blogger Help FAQ. Not hosted on Blogspot? This may be an incentive to switch.
Have fun, & please leave a ton of comments documenting your reactions and experiences with the upgrade.
Update 8/15: Check this out on Slashdot, or Digg It
Filed in: google blogger blogtech webtech beta