well already both Arc V1 and V2 has got lots of positive reviews and that i wont deny. Arc is way better than xperia legacy's previous phones but as compared to Xperia Neo which was released later, it lags behind.
There had been a lot of changes in this Xperia prophecy from Xperia x10 to Xperia Neo as in between there came Xperia x10 Mini, X10 Mini pro, Xperia x10i, Xperia Play, Xperia Arc and then finally came Xperia neo however the interesting thing to note bout these xperia phones is though all being smartphones still they possess an android heart. But i remember previous x8 had updgrade upto 2.1 or 2.2 froyo and i feel that was pretty lame. So its true that it is x10 with 2.3 gingerbread version android OS which inherited it to other smartphones of Xperia legacy following it.
There's a lot of difference between previous SE Xperia phones and this new sony ericsson xperia neo however xperia arc was launched before xperia neo and both have some similarities in internal design while display screen of arc is slightly bigger than neo.
Both the phones have 2.3 Gingerbread Andorid OS. Processor of neo is much advanced than arc and obviously it has got an enhanced video watching and gaming capabilities. Previous version like Xperia Play, Pro, Mini Pro all had 2.3 OS version but they lacked processing speed as compared to new Arc and Neo.
However Xperia Play matches sumwhat to the these new xperia phones as it was considered to be a gaming phone but cant be considered an equivalent. Infact
sony ericsson Xperia neo in terms of processor power, camera and cost is much more beneficial than previously launched Arc. And the most important thing to me is its camera having 8MP capability with additional front facing camera thus high quality video capturing and image capturing will be much more pleasurable on neo.