This is the final 1.2 release, which brings a lot of improvements and new features. The main ones are:
- Improved performances
- Better Interoperability with Confluence
- Cleanup and improvements to the XMLRPC interface
- Recycle bin feature for deleted documents
- Minor edits and edit comments
- New users, groups and rights management UI
- Mail sender plugin to send emails from Velocity
- Watchlist feature to be notified of pages in documents or spaces
- Scheduler plugin and application to schedule Groovy scripts to be executed at given times
- New macro to display panels inside pages
- JODA Time plugin to perform dates computations in Velocity scripts
- Lucene search stabilized and now works in multiwiki setups
- New statistics API and UI
- Add automatic database migrations for easier XWiki installs
See the release notes for full details.
We would like to thanks Google and their Summer of Code program, which sponsored several of these features, like the XmlRpc improvements and Confluence integration (Catalin), the Recycle bin feature, minor edits and edit comments, automatic database migrations (Artem), various UI improvements (Evelina), and others.
Big thanks also to the XWiki community, which tested XWiki and reported bugs, and sometimes provided patches, too, and bugged us with lots of questions 
-The XWiki Development Team
