WHS PP2 is simply the second power pack to the original WHS. A power pack is much like a service pack for any another Microsoft operating system, except that its main focus is to bring new features to the consumer, in addition to the usual bug fixes. It will likely contain features that didn't make the cut for PP1. PP2 will be free.
WHS version 2 is based off the original WHS, but will likely come with a revamped UI and other completely new features. It is also speculated to be based off of Windows Server 2008 (R2?); WHS v1 is based off of Windows Server 2003 Service Pack 2. WHS v2 will likely be sold as a new product.
Full Story: http://arstechnica.com/journals/microsoft.ars/2009/01/20/upcoming-for-windows-home-server-pp2-and-version-2
