Lots of cosmetic and mechanical differences. Porsches are continually getting more powerful, stronger braking, more capable, and often more heavy.
The 996.2 and 997.1 are similar chassis-wise, but different in details. Most parts between the generations are not interchangeable. In general, the 996 is a little more hard edged but not as capable. I actially prefer the 996 as a driver's car. Also most feel that the 997 is much better looking. To go back to the IMS, most 996s have replaceable bearings, the 997.1 does not.
These cars are not cheap to own and any car that didn't get regular, proven maintenance should be avoided. Suspension bushings, air/oil coolers, spark plug tubes, door and window sensors, rear main seals, wheel bearings all seem to wear out much more often than one would normally expect.