i know there are numerous reviews out there, but here is my take.
i have both phones in front of me now.
looks
ace - chic, high end sophisticated
defy - manly, engineer's phone, construction worker's phone
screen
ace - feels low resolution with big pixels
defy - smoother, and looks better under sunlight (got ambient light sensor)
os
ace - 2.2.1 upgradeable to 2.3
defy - 2.1 upgradeable to 2.2
processor (though is same 800mhz)
ace - very slow. even angry bird lite struggles.
defy - even at 2.1, everything flies beautifully.
storage
ace - painfully 158mb on phone
defy - 2gb on phone
(i know you can slot in a sd card. but not all apps can move to sd)
memory
ace 278mb - have to put atk on all the time
defy 512mb
camera
ace - wonderfully popping and clear
defy - not so good. soft edges, agressive compression
initially i wanted an ace, but after playing with it, it gives me the impression of a good phone only on the outside. and hardware level limitations cannot be solved easily.
then i found defy. i am a supporter of TI's processors and it overclocks wonderfully to 1.2ghz. initially I am worried about defy's 2.1 os but it turns out liveable. hoping the 2.2 upgrade can bring some joy.