I assume you're talking about the "standalone" not the TiVO that's combined with a DirecTV receiver, correct?
Apparently TiVo is using a cheaper mpeg encoder chip (Broadcom BCM7040) in the Series 2 and word is that the quality is lesser because of it. Let your eyes decide because there seem to be a lot of people that are fine with it. Others however seem less than enthused. The Series 1 uses an IBM CS22 mpeg encoder chip which is said to do a better job.
If you're talking about the combo (DirecTV + TiVo, often called DirecTiVo) boxes, the series 2 isn't out yet. When it does come out, it shouldn't have this problem as the mpeg encoding is done by DirecTV and not in the TiVo box.
-Steve
(edit: Oops... you see you put SA in subject, so you are talking about the standalone. I'll leave the other comments about the DirecTiVo as they may be of interest to someone)