My first impression, as always, is that Newsgator is much prettier than Bloglines. I don't really care about this too much - but for your new users (be they new to the Internet in general or RSS specifically), I think Newsgator has the best curb appeal.
The app seems to be a bit more responsive as well. The response of Bloglines is, from time to time, slow when I open a folder in the left pane (to view items in the right). It loads, but there are many times where it just sort of pauses, and you don't know what's up.
Once you get things loaded, I get confused. Bloglines, to me, is a much better presentation of data. For instance, I imported nearly 100 feeds to Newsgator (incidentally, what I read on Bloglines). This list had lots of unread items, as expected. But what really got me was that almost every one of the items had the exact same time.
Now it's possible that Newsgator went out and fetched results for each of those feeds as soon as I subscribed. Unlikely, but possible, as some of my feeds are a bit obscure. But there are other feeds that are very well read, and those feeds appeared to show all of their items with the same time - even items that went back over the last week. The end result was very confusing.
As this was my first true attempt at reading using Newsgator, I'll give it another chance or three, and see if it clears up - but that just about knocked it out of the running right there. I like to know when things happen, and Newsgator doesn't seem to provide it as clearly as Bloglines.
I also like that Bloglines has better per-folder settings. It looks like Newsgator has a title function, and you can even customize it, which is really neat - but it appears to be in effect for your entire account - not just applied to a single feed/folder.
There are feeds I like to see in their entirety, but there are also feeds (think busy feeds like Boing Boing or Slashdot) that I like to read titles-only. If there's something interesting, I can click to read more. I don't think that's available in Newsgator.
Somewhat related is that Bloglines allows me to not only rename the feeds from their title, but to reorder them. I have yet to figure out either option in Newsgator. Might be that they are there, but they are not intuitive.
Update: According to this link in the Newsgator forums, there is currently no ability to rename feeds - but it is something that appears to be on the way. And, incidentally, the forum search function doesn't work in Firefox.
Update: After conferring with Peter, it's been determined that this also affects the Newsgator import function - even if your Bloglines output (or other OPML file) contains the "correct" titles, Newsgator will not import them correctly, but instead will pull them from the feeds.
The import function from Newsgator is much better than Bloglines, and the whole management interface as a whole is nicer too. I also think that Newsgator allows nested folders - at least, my imported items were nesteed - though I can't seem to create them through the interface. That's just a little strange.
Update: You can create a folder, then move it into another folder, but I don't believe there is a way to create a folder and have it go directly into another folder - it appears that you can only create them at the top-level (and then move them).
When Bloglines presents folders, it includes items arranged by feed, which is nice to keep a thread of material. I like that. At the same time, I can see the advantage to reading things grouped into a single list, like Newsgator. I think my folders just aren't set up to do that. So I'll play with the folder structure, but I don't think this is an issue.
I do like that Newsgator offers integrated authentication, as opposed to the Bloglines method of just including the auth info in the URL. That's a nice feature to have. If they would just add a few touches on usability, I think that they would make quite a good competitor to Bloglines. As it is, the functionality is just a bit lacking, and some free features on Bloglines (search feeds, email feeds) will cost you at Newsgator. I think I'll stick with Bloglines for the time being. Nice to see competition though.
Update: After my first real "update cycle", it's safe to say that Newsgator is again going on the back burner. Just too many things that don't work right. Of course, I'm used to how things don't work right on Bloglines, that doens't necessarily make them any "righeer" - but they do make more sense.
One thing that gets me is not easily being able to tell where the entries came from in the first place. Again, for some feeds, this is okay - but for others, it's a must. And that little light-grey feed indicator at the bottom of each item just isn't enough to do it.
Bloglines also has the "ignore new items" flag, which is awesome for feeds such as those from Sourceforge, where counts are constantly changing. Newsgator displays them as new. Constantly. This one alone would probably have done it if I hadn't noticed it earlier. Back to Bloglines. Hooray!