While the Mango update is a huge update to the Windows Phone 7 platform, the hardware requirement changes are actually very minimal.  The only two changes are to require a gyro sensor, and to allow for an MSM7x30 processor.  Other than that, all of the original minimum requirements stand.

The OS platform itself is where the huge enhancements are going on.

• Silverlight and XNA integration, you no longer need to choose one or the other, you get both.
• HTML5 support is here, via IE9, which is using the same codebase on WP7 as the desktop version of IE9
• MUCH stronger integration with the camera and other sensors on the device.
• The ability to interact directly with sockets.
• Agents are being introduced, using extremely limited resources for background processing to allow the majority of the device’s power to interact with foreground applications.  Agents also run in the same app domain as your application, giving your agent access to the same IsolatedStorage and database, while running in a different process, on a different schedule, with no user interaction.
• Structured storage, based on SQL CE.
• Content sharing via the new data sharing service.  Just exchange a token to authorize other applications to access your application’s data.

Those aside, there are drastic performance improvements coming to Mango that most applications are going to just get for free helping them feel smoother, snappier, and giving an overall better user experience.