[AT&T Samsung Galaxy S II Skyrocket SGH-I727] UZ7:
If we take from a hardware standpoint here are the key differences:

CPU:

Snapdragon S3 MSM8260 45nm 1.5GHz (Dual Core)-> Snapdragon S4 MSM8960 28nm 1.5GHz (Dual Core)

(Here we see the die shrink, with die shrinks on new architecture you can see battery improvements, temperature improvements and clock per clock speeds its faster)

GPU:

Adreno 220 -> Adreno 225

RAM:

1GB Single Channel -> 2GB Dual Channel

Display:

480x800 -> 720x1280

Gorilla Glass 1 -> Gorilla Glass 2

Of course there is a lot of other features/hardware that are "better" such as camera and stock battery etc...

In terms of the phone itself, the SR is not lacking since its still a dual core phones while other phones are still single and working their way to dual core. Quad core are starting to arise but they wont be as efficient for a while since the games/apps we use will not take advantage of all the cores. That being said by the time we do utilize them most likely there will be a newer and better hardware. Also 720p may start becoming the next standard in display as "HD" is making its way onto phones. If you think about hardware difference, think of Samsung Galaxy S2 as 1, Skyrocket as 1.5 and Galaxy S3 as 2. S3 (North America) is still dual core but it is an efficient/fast CPU.

Good example of this is like PC specs:

Q6600 = Quad (65nm)

Q9550 = Quad (45nm)

i5 760 = Quad (45nm)

i5 2500K = Quad (32nm)

i5 3570K = Quad (28nm)

What I mean about that is the standard has started to become quad in the CPU/laptop world but the big difference is the efficiency(power consumption), speed (clock per clock) and maybe other supported hardware features.

So is it a big step up?.... Yes and no, yes because hardwarewise it is better but the SR isnt lacking to the point where ICS/JB lags on it or any other apps/games atm. Of course if you have insane graphical games maybe it will slug the SR in terms of performance but thats entirely on what you use it for. Ask the same question next year and you'll probably hear the same, the S3 is not lacking but xxx (S4 or whatever is "faster"). Technology will always get better its just whether you want to pay to get the latest and greatest or not.

I buy my gear based on my use. You wont see me buying computers that are 6-8 cores, Quad SLI/CFX video cards or whatever because I don't need them lol. My hardware is fully capable of playing the current games so thats what I usually upgrade for, my uses.

If you compare the SR to the S3 of course you will see a good difference but if you only use the phone for facebook, instagram, twitter, calling, texting, whatever, the SR can do those. Now if it can't do those and its slow and always dying on you and programs aren't working and super super sluggish then yeah those are the reasons for the upgrade.

Now if we go to the development side yes, phones like Galaxy Nexus, Galaxy S2 (original) and Galaxy S3 will have big support as most people get them when they first come out so if you want to look for it in that view they have more popularity. Some people want to get the phones that everyones getting while others don't want the "same exact" one but on a similar page. :D