Johnny will probably chime in when he sees this thread, he's owned both.
Depends what you need. If off-roading is your bag then I'd go with an '05. Easier to lift and lift more, better skidplates (you can get a fuel tank skidplate from Ford, I did), limited-slip available, front tow hooks.
'08, it sits lower, you can only lift it 2.5" with Road Bully's kit, traction control instead of limited-slip (but I'm told a regular 8.8" limited-slip will fit), fuel tank skidplate is a fleet option, so you can get one from Ford. No front tow hooks on an '08 nor is there anywhere to put them. The in-floor storage compartments in the bed are the shiznit. No more toolbox taking up space.
That being said....
If off-roading is not important to you,
the ride, handling, overall solidness, and build quality of an '07+ is so vastly superior to a Gen 1 that it isn't even funny. (Cue the song "A Whole New World" from the Disney movie "Aladdin".) Also you don't need to buy new shocks on your way home from the dealer and you can get a V8.
Not that you
can't off-road a Gen 2, as long as you keep it to the light to moderate stuff. Realistically though, most people don't go off-roading. Me, I just don't have time any more. The Trac is for towing stuff, hauling stuff, and getting around in snow.