KDE 4.2 beta 2 is out! The official announcement can be found here.
Got this upgrade to KDE 4.2 beta 2 (KDE 4.1.85) on 18th midnight. After a ~108 MB upgrade and a reboot, there have been many positive changes. Of the numerous upgrades, I noticed these:
1. The systray notification daemon fix. Earlier, the daemon showed a green up/down arrow in the systray for showing/hiding the daemon. Clicking on the notification window/pausing the transfer would crash the whole plasma workspace. Now, there is a modification to the appearance of the daemon. The notification is *much* stable. It does not crash anymore. I can successfull stop, pause and resume my transfers from the daemon itself.

2. Thumbnail previews for folder-view have been fixed. Earlier, it would not successfully show thumbnails for some png’s and jpeg’s. Now everything looks perfect. I can choose which thumbnails to display and which not (choose, as in select the file formats to display the thumbnail for).

3. Keyboard shortcuts have been fixed. Now all my global shortcuts work. That means I can take screenshots by pressing “Prt Scr” … yay!!
4. The calendar plasma widget has been modified to look better. Earlier, it was a cluttered look, but now, it looks better. What I see is the spacing has been increased and made uniform:

5. Gwenview crop tool has also been fixed. Now when I crop a portion of an image, the selector does not go out of the image scope (boundary). Earlier, I had to be careful in cropping a portion of an image close to it’s boundary.
6. KWin effects: Significant changes have been made to the kwin effects. They now work smoother with EXA rendering method. I have now removed the forcing of XAA. Even gtk apps like firefox also do well with EXA.
I also see a bunch of new plugins working, like the desktop sphere, cylinder, the magic lamp (though this was working in beta 1 also).
7. Grouping has been polished. Manual grouping still is broken, but forcing of rows and auto grouping works perfectly.
8. The plasma menu (the cashew at the top right side) has also been fixed. Now it does not become bigger each time it is opened!
9. KRunner has added functionality viz spell checking, web-history, a smart unit converter, calculator and many more:

10. Pinheiro‘s AIR wallpaper looks great. With the latest trunk, you would see this wallpaper as a new addition.

^^ This was a screeny from my friend neverendingo‘s desktop posted here at the KDE forums.
So that would be what all I could notice in a day. With added stability, beta 2 is a must try. It has so much more than the 4.1.x releases that you will definitely be surprised and more importantly, pleased! It works like a charm on this old laptop of mine with a GMA900 onboard 
Now I’m eagerly waiting for the final release