Beyond a new look for Blender 2.5, the rendering code in this new alpha release has much faster ray-tracing, support for volumetric rendering, and a new interface is being worked on to begin supporting renderers external to Blender. Furthermore, there is a new Operator tool system, data access for .blend files have been changed, and with the animation system now everything (as in every single object) can be animated.
Continuing with all of the Blender changes, there is also a new fluid-based smoke simulation engine, the particles system has been redone, and there are many other changes and new features beyond everything that we have already mentioned.
While in development, this version of Blender is 2.5, but when it's officially released as stable in the middle of 2010, this major overhaul of this graphics software will be called Blender 2.6. Before that, another three development alpha/beta releases are planned in the 2.5 series.
Details on the first alpha release for Blender 2.5 can be found in the Blender Foundation announcement and then the more detailed Blender 2.5 development log. This should be a very interesting release and serve as a major advancement for free software in the 3D graphics/animation world.