The major difference is the severity of the episodes and the type of mania they experience. Bipolar I is the more "severe" form of the disorder. The mania is more extreme and it is more likely that left untreated, the sufferer will have a break with reality. The highs go way higher than they do with Bipolar II. The person is more likely to be completely irrational during manias.
Bipolar II usually experiences "hypomania" instead of mania. This feels like anxiety, irritation, anger, some elation sometimes, usually an excess of energy -- but not to the extent of someone having a manic phase. Most bipolar II's are still in control of their faculties during a spell. They will fall into a depression and spend more time in depressions than bipolar I's do. Many people with bipolar II spent a long time being diagnosed "depressed" before they got the correct diagnosis.
Let me recommend the book "The Bipolar Disorder Survival Guide" by David Miklowitz. It's a great book, and if you're going to be living with this condition for the rest of your life, you're going to want to know as much about it as possible.
Co-Moderator, Bipolar Forum