Difference between series 1 & 2?

Series 1 and 2 Skylanders can be used in either game. However, the orange based series 2 Skylanders have a number of advantages in Skylanders Giants over their predecessors with green bases.

1. The series 2 figures all have an extra ability they can buy and unlock, called the "Wow-Pow" ability. Specifically, series 2 Ignitor's Wow-Pow is called "Blue Flame!" It leaves a trial of blue fire behind Ignitor after he uses his flame form or a mega slam.

2. Series 1 figures will not unlock Heroic Challenges in Skylanders Giants. Only series 2 and new skylanders will give you new challenges.

3. Series 2 figures only (not even new skylanders) give you the option of switching their upgrade paths to the other path. Normally you would have to erase a skylander's data completely in order to try a different path.

4. All of the experience boosting accolades in the new game with the exception of the first two are awarded only for orange based figures: the series 2 characters and the skylanders new to Giants.

These are the only differences I know off the top of my head. Both original and series 2 skylanders can be leveled up to level 15 in the new game.