Seems to have lost some of the original's exploration and atmosphere, and the "it's too easy" complaints have been addressed by adding annoying enemies with random movement/firing patterns that take more luck than skill to get past sometimes.
Now that I've actually played it all the way through, I'm going to second this. Funny thing: I actually found The Machine a bit boring. I loved Knytt as an exploration-oriented relax-and-admire-the-funny-animals-em-up. The Machine was just another platformer, admittedly with some interesting enemies and an excellent control scheme. My favourite part of the game was after you turned the machine itself off, and everything became idyllic and pleasant.
But, of course, I can't complain, because it's not The Machine, it's Knytt Stories, and there's plenty of scope for users to make their own levels however they want them to be. I just wish there was a better way to download them than in two 30Mb packs.