DS2 has a better equipment upgrade system, all covenants actually seems to serve a purpose, I like the theme of dead kingdoms and rebirth better, I like most of the outfits better than, I had more fun with magic in this one, general graphical improvements, I really loved being able to teleport between bonfires right off the bat, the entire experience is generally more consistent than DS1 and the DLC areas are amazing.
As for DS1 I just didn't care a whole lot for the gothic Asgard theme, the story/lore is not really all at interesting, the end game levels are just increadibly trite compared to the first half of the game, I could do without the humanity system and I thougt it many aspects it was a step down from Demon's Souls. Hell, I remember thinking it was a huge departure from the Demon's Souls atmosphere, characters and presentation.
Equipment upgrade - agree, 2 is clearly better
Covenants - meh, bad in 1, bad in 2
Story is the same, same world, same everything. Just playing further along the story in 2.
Fashionsouls - preferred 1
Graphics - disgusting, 1 was clear winner. The shaded woods, windmill levels, just really poor graphically.
The only level I really didn't like in 1 was the demon area. That was horrible. The rest was way better, in my opinion, than most of 2. 2 had the pirate area, that was great, but most of it seemed really bland and boring. Shaded woods, brightstone, windmill all awful. The castle was very good, second best area. I thought the DLC for both games were very good.
I agree DS1 was a big step away from Demon's Souls, but I didn't fault it for that. DeS was great, but DS1 had some great stuff too, the interlocking world is far better than DeS or DS2 for starters, the graphics were the best of the three, the final boss was the best, combat was good (loved the kick). Downsides were worst pvp of the three, worst spells. Not many decent spells in DS1.