Update: For all the reasons the Xoom beats the iPad 2, check out my blog post, Motorola Xoom versus the iPad 2: The Xoom is a clear winner.
Android 3.0, called Honeycomb, is a thing of beauty. It's optimized for tablets, and cleaned up some of Android's rough edges. It's as intuitive to use as the iPad's iOS, but far more customizable and feature-rich. Notifications are handled better and multitasking and switching between apps is easier. The widgets are far better than anything in the iOS as well. If you were put off by earlier versions of Android because of a sometimes-confusing interface, you'll be pleased with Honeycomb.
More powerful hardware
The Xoom has an Nvidia Tegra 2 dual core processor, which make the tablet fast and smooth-operating. It's also capable of playing 3D games. The iPad has a pokey, single core processor. Advantage: Xoom.
Higher screen resolution
The Xoom's 10-inch screen has a resolution of 1280 x 800, and is widescreen, so it's great for watching movies and videos. The iPad's 9.7-inch display is only 1024 x 768.
Front and rear cameras
With the Xoom, you get front and rear cameras, for taking photos and videos, and for video chat. With the iPad, you get no camera. Two trumps none.
A better browser
The Chrome browser built into Xoom is far superior to the iPad's Safari. It does tabbed browsing, and like the PC and Mac versions of Chrome, a single box does double-duty as a search box and for typing in a URL. And it will also automatically sync your bookmarks with Chrome on your PC and Mac.
It will play Flash
Flash wasn't quite ready for the Xoom launch, but it will be available soon. As you've no doubt heard, Flash will never be available for the iPad. So the Xoom offers you a greater choice of content than does the iPad.
No Big Brother
When you get an iPad, Apple determines what apps you can download and what apps you can't --- and it uses a heavy hand. It's banned many apps, even once banning one by Pulitzer prize winning cartoonist Mark Fiore, until publicity forced Apple to change its mind. And Apple also banned an app that allowed people to get information from the WikiLeaks site. Such an app is available for free for Android. The upshot: With the Xoom, you can download any app you want, either through the Android Market, or from the Web.
Better built-in apps
Google's built-in apps, including Gmail, Google Maps, and Google Calendar, beat anything built into the iPad. And because of the Xoom's Tegra 2 chip, you'll be able to use vector graphics and 3D rendering in Google Maps.
Note: Computerworld has plenty of other Xoom coverage. You'll want to read Motorola Xoom: The complete FAQ by fellow blogger JR Raphael, Motorola review roundup: The critics weigh in, and the review Xoom: Tablet impresses, but drawbacks remain.