New effects: Blocks under water "drip" into cave/cavern below. LAVA does the same thing!
Trees on higher altitudes have less leaves.
Grass drops more seeds.
Pressing "escape" no longer pauses the game. (Might be a bug some people are experiencing. Unconfirmed.)
Lava flows faster.
Reports of more "lag". Remember this is Pre-Release and there will be bugs.
Do not jump infinitely when holding down space bar.
Dried up river-beds in plains biome.
Animal DO NOT breed. Confirmed.
Water drips through wool. Bug?
Pumpking seeds are back in the chests in the dungeons!
Lots of reports of mega-oceans.
Armor values are now determined differently.
Roses are back.
Saplings drop less.
Mushrooms: Mushroom biomes ARE islands.
"Infected" cows via shrooms
Shearing Mushroom Cows nets you around 2-5 (need verification on precise range) red mushrooms, and also gets you a normal cow.
According to the picture, new grass?
Mushroom Island: Warm biome. Frequent Rain. Somewhat Mountainous. Land base level near sea level.
Mushroom Island Shore: Warm biome. Frequent Rain. Flat land. Land base far below sea level (same as ocean.
Thus, Mushroom Island biomes actually spawn in the middle of Mushroom Island Shore biomes. However, the land for Shore biomes is underwater, which makes them appear like Oceans.
The top block for these biomes is the "mycel" block I mentioned earlier (which is not town related after all, but does play some kind of melody). No monsters, animals, or squids spawn in these biomes EXCEPT for mushroom cows.
Snow Biome: "Snow" biomes more rare. Unconfirmed.
Snowman! - Built by Two snow block then pumpkin PLACES not crafted. Not sure how to make a snowman without a pumpkin head. They fight other "bad" mobs. They drop snowballs.
Snowmen work in the Nether. (Bug? Unconfirmed.)
Snow now settles on ice.
Frozen Ocean: Cold biome. Occasional Rain. Somewhat Mountainous. Land base level far below sea level. No animals spawn in this biome.
Frozen River: Cold biome. Occasional Rain. Flat land. Land base level somewhat below sea level. No animals spawn in this biome.
Ice Plains: Same as Plains, except cold temperature.
Ice Mountains: Same as Extreme Hills, except cold temperature.
Swamps: Lilly Pads - Picked up by "Punching". Place by putting next to another lilly or surface block. Lilly Pads turn grey when picked up - bug?
Darker grass - new grass texture for swamps
Darker water around the swamp area
Villages: Village Monks - 1 Priest is dressed in white
A few other skins reported - aprons and pink?
Reported that the mobs folder have 6 different textures for the villagers. (Butcher, Farmer, Librarian, priest, smith & villager).
Nether:Nether Brick
Nether Fence

Nether Stairs

Nether Stronghold - Netherholds!
Nether Slimes
"Blaze" Mob
Nether Dungeons (Same a netherholds?)
Netherwart - nether plant (A nether mushroom? Need more clarification.)
Ghasts shoot "bombs" now.
New Sounds by pigmen and ghasts (unconfirmed)
Pigman drops "Rotten Flesh" & "Gold Nugget" - 3x3 craft = Gold Ingot
Ghasts drop "Ghast Tear" - Unknown use
Blazes drop "Blaze Rod" - Unknown use.
New ID's:New Blocks:
ID 110 - "mycel" - Apparently related to Villages, and has appearance of either grass or snow. If we had updated sounds, it would apparently play some kind of town melody when the player is nearby or when it is stepped on.
ID 111 - Water Lily
ID 112 - Nether Brick
ID 113 - Nether Fence
ID 114 - Nether Brick Stairs
ID 115 - Nether Stalk (some kind of plant that grows over soulsand and appears in nether strongholds)
New Items:ID 369 - Blaze Rod
ID 370 - Ghast Tear
ID 371 - "Gold Nugget"
ID 372 - Nether Stalk Seeds
New Biomes:ID 10 - Frozen Ocean
ID 11 - Frozen River
ID 12 - Ice Plains
ID 13 - Ice Mountains
ID 14 - Mushroom Island
ID 15 - Mushroom Island Shore
Enderman had their spawning frequency cut in half.
New Mobs:ID 13 - Small Fireball
ID 61 - Lava Slime
ID 62 - Blaze
ID 96 - Mushroom Cow
ID 97 - Snow Man
ID 120 - Villager