v1.3 contains a lot of improvements and bugfixes, and also introduces quite a bit of new functionality. Be sure to checkout the v1.3 Changelog, as it also lists all items deprecated in v1.2, which are now removed.
If you find any bugs, as always, please file an issue on GitHub (make sure you search to make sure it hasn't already been submitted).
Remember, when sending pull requests for bugfixes on the 1.3 release, send them against the 1.3/develop repository. For new features, send pull requests against the 1.4/develop repository. Pull requests against the wrong repository will be asked to be resubmitted against the correct branch. If you're in doubt on which branch your pull-request should be, hop on IRC (#fuelphp on freenode) and ask, that will save us all some time.
The Development Team