At first I thought the 3.5 version was an improvement, but later I realized that for me it was not. At best, the changes were unnecessary but they also caused some problem to the game as a whole.
It is true that 3.0 damage reduction was conceived as "mostly immune to normal weapons, or to weapons not magical enough", and there is nothing wrong with that! There are monsters immune to all spells, others immune to certain energy damage, others immune to mind-effects, others immune to some combat actions, others immune to sneak attack... Immunities require the players to think creatively. Maybe this time there's a monster immune to spells, so the Wizard has to cast other spells instead; next there are undead, so the Rogue cannot sneak attack and has to think about another strategy; and then there's a monster immune to weapons (or at least the party's current weapons) to the Fighter has to find other ways to help. How about trying to block, trip, entangle, grapple, lure the monster into a trap?
"All or nothing" is a problem for players who cannot think much else than the usual do-damage tactic. So what did 3.5 do? They lowered most DR values, so that now the do-damage tactic is still viable enough that everyone in fact does that, whether they have a weapon that bypasses DR or not, because DR is mostly just a "damage discount" (point taken: the DR name is more appropriate in 3.5 than in 3.0).
Also, the +1 to +5 range (which in reality was rather +1 to +3 because in the entire 3.0 PHB only the Tarrasque has DR +5 and only the Solar has DR +4) should not be thought in the light of a party where every PC either has the right weapon or not, because many times some of them had the powerful enough weapon and others did not, so part of the team could go the damage route while the rest had to think more creatively, but the party was rarely totally prevented to beat the monster (which incidentally isn't even a bad occurrence at all! Sometimes it's nice to have an encounter where the target isn't to kill the monsters but to save your rear cleavage).
The only thing I actually prefer of the 3.5 version is the introduction of Good and Evil weapons, which I think adds diversity.
About the materials, except Silver which was always intended as +0.5 ("half magic"), I would actually prefer that a special material dealt additional damage to some type of creature instead of bypassing DR.