Received a Kindle Fire HD (16g) and a Kindle PaperWhite as gifts. Purchased the Amazon cases for each. Tried a Marware Axis case for the Kindle Fire HD. Posted reviews of each on the Amazon product review pages so I won't repeat the reviews here. If anyone is interested I use the same handle there.
Would I have purchased the KFHD had I not received it as a gift? Possibly not from the specs alone. I've had a very good experience with the first generation KF and honestly didn't feel the need to upgrade.
On the other hand, after using the KFHD for nearly a month, I rarely touch my first generation KF. The KFHD is simply that much better in so many ways from the display to the sound, from the smoothness of the screens to the performance of the apps. It is a much, much better device for reading, viewing, listening...well, just about everything.
Are the differences worth laying out another $200? Obviously, that's a subjective judgment. If you're someone who has suffered through the infamous "loose microUSB port" I'd suggest chucking the original generation device and purchasing the KFHD. On the other hand, if you're perfectly satisfied with the first gen device, you may be better off not knowing what you're missing.