For the longest time, there has been a wide chasm between Firefox and IE. At its inception, Firefox was able to capitalize on many of the features and functionality missing from the lethargic yet ubiquitous IE. Microsoft woke up, and implemented many of those features in their latest release; IE 7. Firefox of course was not be outdone, and has released version 2.0, with some significant improvements to previous releases.
Now that I've downloaded and run both, I'm in a position to make (and share) an informed opinion.
The simple truth of the matter is that Microsoft has done well with the new release. And because they've become the 'de facto' standard for many corporations, there will be widespread adoption regardless of the improvements in either browser. However, while there's a large list of improvements, it is really only one that could possibly set it apart as the 'better' browser; and that is the adoption of Add-Ons.
Extensions have existed in Firefox since the beginning, and they've been the single reason why I and so many others have become devoted to the browser. At any given time, I'm using at least 6 important extensions, that make my web-browsing and developing life so much easier. In the past, most 'extensions' for IE were toolbars, and ended up being little more than spyware.
IE 7 now allows extensions, although it will take some time to catch up with the great Firefox extension repository. I found it interesting to learn of one of the first cross-browser extension, called Trailfire. Trailfire is a Firefox Extension; Internet Explorer 7 add-on, and essentially a hosted service that allows users to comment on the websites they visit, leaving a 'trail' so to speak.
Microsoft is recommending the Add-On for IE7:
You can also get it for Firefox to test out:
I believe we'll be seeing many more cross-browser extensions in the near future. Personally, I'm still opting to use Firefox, as all the extension I already need are well into an advanced stage of development.