Before you install, please note that the iLife '09 setup will nuke your older iLife apps. You'll need your original install disc to revert. I ran a Spotlight search and those old iLife apps are nowhere to be found. If you think you might want to roll back, be sure to back up your apps and your iPhoto library beforehand.
When you start up iPhoto for the first time it updates your libraries and starts an immediate search for faces in your photos. That search goes on in the background, so you can do other things with iPhoto at the same time.
Here's a rundown on the new features:
The most technically advanced feature is Faces. iPhoto now does some face recognition to help you automatically find people in your bushel of images. You start by identifying a face, and you enter the person's name. iPhoto will then suggest matches in your library, and you can confirm them with a click. iPhoto generates a cork board where you can see one example of each face you have identified. Double-click on that face and it displays all the other faces that match.
The technology is not perfect. It didn't get all the matches right, but when it was wrong I'd have to admit the person it found had a similar face. To try and trick it, I showed it a picture of a parrot. Although there were many similar shots of the same parrot, iPhoto utterly failed to match any of them. I think Faces wants human faces (although there are examples of penguins being recognized, and Mac|Life has tested it out successfully on feline faces).
Check out the gallery for some close ups of iPhoto features and controls, and read on for more notes on the updated features.