I have both. I can confirm the following. HD PVR 1212 has composite and component input options, and a component output. HD PVR 2 has HDMI input and output, but the option for component input is there with an included cable. This is the only way you can record PS3 games, because it has some locking feature nonsense on its HDMI output from the PS3. Also, you can do composite input for old-arse consoles if you buy a separate cable.
Aye but you want to know about the quality. The prime difference is that HD PVR 1212 caps at 1080i, and the HD PVR 2 goes up to 1080p. The HD PVR 1212 does 60 frames-per-second for all settings (to the best of my knowledge), as long as the game you're recording runs at that much. You can't go getting 60fps OoT, for instance, that stays put at 30fps. The HD PVR 2 does the same, where all options up to 1080i can do 60fps, but the benefit of 1080p is that it can't record 60fps, it caps at 30.
So the one quality option the HD PVR 2 has over the 1212 records at half the frame-rate. Unless you're really anal about 1080p resolutions, pick either, it doesn't matter. Feel free to ask any questions.