Originally Posted by Gohloum
1 - On screen assets can be removed from one parent and attached to another
2 - Depth management can be a real issue with certain game types in AS2
3 - Onscreen assets can be removed from the display but remain in memory and be manipulated accordingly
4 - E4X = less complicated loops and traversing of XML data
5 - separation of engine from visual assets. It is possible to have a code .swf and a separate skin .swf
6 - Introduction of channels for sounds (something many other languages and middleware leverage).
I could probably come up with more, but this is a good start.
If your game consists more of something self contained, compact and about the size of most of the tutorials in books and about the web, then all of these points may not apply. However, if you want to push flash to any level of a console quality experience, then AS3 is inevitable.
I just finished up an Isometric game with about 8 - 12 hours of play. Granted it is done in AS2, but we had to cut some features and build ALOT of work arounds to deal with issues that would have been a snap in AS3. But again, we are talking about a project that 780kb is just code alone. So it's pretty huge.
Again, I feel it depends on the project, scope, and size.