Overall 3E/3.5 still pretty much feels like 1e AD&D, but with a few notable departures and improvements.
Improvements:
1. Constent game mechanic (d20 + mod to beat a DC) streamlines play and gets rid of combat matrices and THAC0.
2. More flexible and internally consistent than 1e
3. Characters are not just identical cookie-cutter designs of each other anymore ability-wise
4. Monsters finally get the same treatment as characters! (stats, feats, skills)
Departures:
1. I've noticed MUCH more min/maxing and powergaming in 3E/3.5 than during my 1e time. This is a bad thing- players quit focusing on roleplaying the character and instead worry only about getting the necessary prereqs out of the way for the prestige class they have had their eye on. Also, the whole planning a character's advancement (build- ugh) from 1st level on annoys me- too much metagame thinking.
2. 3E/3.5 have a videogamey kind of feel. I'm not sure exactly why, but people talking about buffs, powerups, and some of the feats just strike me as belonging more in a video game.
3. Power escalation in 3E/3.5. Admittedly, 3.5 is MUCH better than 3E as far as rampant power escalation, but its still there. I'm not sure why to make everything "bigger, badder, kooler" other than to just increase the power level. And while templates are a cool idea, would monsters with 3+ templates really be running around all that often?
4. 3E/3.5 combats can become a nightmare to run due to all enemies having skills, feats, etc. Also prep time for a 3E/3.5 game is much higher than a corresponding 1e or 2e game.