Hmm I wonder...
SoC.
Defy: 1.2GHz+ cortex A8 and SGX530 (45nm)
Galaxy Ace: Old 800MHz ARM11 that can't run flash etc. (65nm)
Memory:
Defy: 512MB
Galaxy Ace: 384MB
Internal storage:
Defy: 2GB
Galaxy Ace: 512MB
Screen:
Defy: 3.7" IPS @ @ 854×480
Galaxy Ace: 3.5" TFT @ 320×480
Battery:
Defy: 1,540 mAh (still the best Android out there for battery life?)
Galaxy Ace: 1,350 mAh
Defy = Fairly high end single core phone.
Galaxy Ace = Cashing in on the Androids popularity.
Edit:
There might be a new Defy soon (It's getting 2.3.4 leaked builds on XDA btw)
If you don't need the waterproof/rugged features/battery life and don't mind a qwerty keyboard the Desire Z is better, also look at the Samsung Galaxy S.