The difference between my old YJ and my LJ is night and day. Obviously they are two totally different machines (4 vs. 6 cyl, leaf vs. coils, more creature comforts in the LJ), but as far as room and manageability for a family with 2 small kids (4 & 7) it is hands down better. They can climb in easily, fit great with the front seats all the way back, and there is room for stuff behind the rear seat. I had a XJ in between the YJ and LJ, and I rarely miss the 4 doors and bit of extra space.
The LJ is a great Jeep on the road too. Fun to drive around town, still fits in nicely in 'small car parking', and does great on the highway. I am about to go through my first winter with it, but I am sure it will be as great as any Jeep. The only offroad I did with it so far is pulling a trailer through some 6" deep mud to go get a cord and 1/2 of wood, it did great, but I don't have feedback other than that. I can see where the YJ would have been much better for the wheeling I did in CO, but around here (what little wheeling there is) the length, breakover, and departure would not be as critical.
Speaking of towing, this LJ does as well as, if not better than the XJ towing loads. I have a 5x8 trailer that I load up with wood, mulch or dirt, or camping gear, so far the LJ handles it great. I attribute any noticable improvement over the XJ to the low 1st, and disks in the rear.
Some dislike the 6 speed, but I don't mind mine at all. The AX-5 in my YJ was equally cranky if you did not treat it the way it liked to be
Though I did not look for any options, this LJ has just about everyone offered, and it is nice to have dual tops, the sunrider, A/C, rear wiper and defog, temp and compass in the auto dim rearview, woofer and sirius built-in, and things like that when you daily drive the jeep.
Mine is still pretty stock right now, except the 2" BB, but I don't plan to go crazy with it. I like the way it rides, drives, and handles, don't want to change that. I am going to put some mild 31's on (still has crappy GSAs), replace the shocks with something alittle heavier duty, and put some air bags in the rear for towing.
Bottom line is I am really happy with my LJ, and personally it is my favorite Jeep made.