Wow, this is a big improvement over the first game. I just put like an hour in. I was worried that Leaf Village would be reused wholesale, but so far, that's not the case. I liked Leaf Village in the first game, loved exploring it, but I'm glad they aren't putting a carrot in front of me to do it again. That included, this is an improvement in every regard. The graphics are around the board better and the animation is much smoother in both the overworld and in combat (one of the more annoying aspects of the first game is that there appeared to be missing frames. Not good). There's also the new tag mechanic in battles and splitting up your group to do (so far simple) puzzles in the overworld.
The fighting definitely feels tighter, but it's not much different than the first game. It's still a fairly mashy licensed animu fighter. It's a fairly decent one, but that's what it is. I'd give the PS3 game a slight edge in combat, since it feels like an arena fighter which at least makes it feel slightly different, but hey, tagging is always fun, too, so I don't rank them all that far apart.
Visually, the PS3 game is the better total package, but the 360 doesn't have the aliasing problem on black lines that makes the PS3 version look :-/ at times.
So, final judgement: 95/100 GOTY