The interface change is a have-your-cake-and-eat-it-too experiment. The new "MenuTab" UI gives you drop-down choices from the top level of the menu, but you can also press on a top-level menu choice to display an icon bar with identical options. The icon bar is nothing like Micrsoft Office 2007's tab bar, which supports many more options and has more complicated different ways to use it.
MenuTab is a curious design, but it does work. And users who grow accustomed to using the system in one mode likely won't see much of, or be bothered by, the parallel other mode.
Zoho is said to offer simultaneous collaborative editing, as Google Docs does, but when I tested the app I found it far too easy to over-write another user's edits. I do hope this gets fixed very soon. The service also offers a text chat window for collaborating editors. And there's full revision and change tracking in each document, should you ever want to undo the changes someone has made to your doc.
The new version has good sharing options for documents. You post directly to a few different blogging services from Zoho Writer, which is a very nice feature for bloggers. You can also edit in a print view, which shows you page breaks an margins. It's a good working display; even if you never plan to print the document you're working on, you may find the extra white space and page breaks help you focus on your text.
Zoho Writer users Google Gears to give users offline access to their files. Users can sign in using Google or Yahoo credentials. Real geeks may like the embedded LaTeX equation editor.
I find Zoho Writer 2.0 to be a strong word processor that's incredibly easy to learn and use, even more so than Google Docs. The dangerous collaboration function means I can't recommend this product, yet, as a workgroup app. But I wrote this review solo in Zoho, and it didn't give me a minute of confusion or trouble.