I can tell you for one thing that 2.1 means more applications and a better, more complete OS in general. But the main problem lies within the phone itself. With all the bloatware and lagging on the backflip, it's a wonder I didn't toss it off a bridge before making my way to the AT&T store to trade it in for a Captivate. Even my mom, who loved the physical properties of the phone, decided she didn't like it on day 29 and also got the Captivate. The extra $200 is really worth it, and the HTC Aria is a great phone for $80 less. I'm not sure about the Xperia, it also is running an outdated android OS, only 1.6, but it does seem to have favorable reviews for the most part.
Several newer phones, including the Samsung Captivate, have "Flash Lite" on them, for example I can view the full desktop version of youtube on my phone, and although it is a bit jumpy, it can play standard definition video. Android 2.2 will support the full version of Flash 10.1.
Also, if you have looked around these forums, you would have noticed that the 2.1 update keeps getting pushed farther and farther back, and it won't even come to the non-us versions, which leads me to believe that if anything it will slow the phone down even more.
I also read about the Motorola Flipout a month back, basically the successor to the Backflip, which means the Backflip will probably be discontinued soon.
To conclude, it's underpowered, outdated, and even people who really want to like it seem to change their mind after a month. Doesn't sound like a good phone to me. Not to say that other phones don't have their shortcomings too. This phone just isn't worth the contract extension.
EDIT: While I couldn't find a straightforward comparison of 1.5 and 2.1, this article may help you understand the differences, if you scroll down there's a summary at the end.
http://www.differencebetween.net/ob...fference-between-android-1-6-and-android-2-1/
EDIT 2: I also found this 1.5 to 1.6 comparison, so if you look at both of these you should get close to a complete comparison.
1.6 (Donut)
Released: 15 September 2009
Features:
An improved Android Market experience.
An integrated camera, camcorder, and gallery interface.
Gallery now enables users to select multiple photos for deletion.
Updated Voice Search, with faster response and deeper integration with native applications, including the ability to dial contacts.
Updated search experience to allow searching bookmarks, history, contacts, and the web from the home screen.
Updated Technology support for CDMA/EVDO, 802.1x VPN, Gestures, and a Text-to-speech engine
Speed improvements for searching, the camera.[29]
Source:
http://forum.archosfans.com/viewtopic.php?f=47&t=28828
EDIT 3: I also forgot to mention that out of the three devices myself, my Mom, and my friend had, all of us had problems with the phone randomly restarting on us, as well as restarting when trying to use the camera. Talk about a real pain, I don't think I ever had the chance to fully explore the camera features on that phone.