I think you can get a fairly good idea of what is new in RHEL5 at the release notes:
Some of the things I saw when looking at other articles: It includes virtualization (Xen and as of 5.4 KVM). It has enhanced security.
One benefit I see to it over RHEL4 is it now uses yum rather than up2date to do updates. Yum is the same tool used in Fedora for updating packages (though of course the repositories are different.
I did an install of Oracle RAC (CRS etc...) on RHEL5 using a document written for RHEL4 and found significant differences. One of the things I saw is that udev is much more integrated in RHEL5 so the way to setup raw devices was different than RHEL4.
Also of course since RHEL5 was first released in March 2007 it means RHEL4 even with updates is fairly old wheras the newest RHEL5 (RHEL 5.4) was just released a month or so ago. The way RedHat does many packages is to start with a base release then retrofit that base with with bug and security fixes rather than provide the latest greatest. Due to the age of RHEL4 it will be end of life sooner than RHEL5. There is no reason to have to install RHEL4 these days and if you're dealing with a vendor that tells you their software doesn't work on RHEL5 you should drop them as it is a good sign that they're not actually keeping up.
Finally of course RHEL5 has a newer kernel than RHEL4 and each new subrelease (5.1, 5.2, 5.3, 5.4) will have a later version.