JSF1 does not support the usage of annotations but JSF2 supports annotations that makes it far better than JSF1.
JSF1 Ajax support was limited, however JSF2 support all the ajax features.
JSF1 does not provide Template concepts whereas JSF2 does.
JSF1 was first released and API was having a lot of bugs, JSF2 is totally redesigned and can be used as MVC framework in larger applications.