Glock regularly introduces upgrades to their guns, often unannounced, often quite subtle. I personally think that the current Gen III G17 is a better gun than a Gen II. I believe that the current guns are generally more tightly fitted (particularly in the barrel-to-slide fit) and have better out-of-the-box trigger pulls.
I personally prefer the current receiver-I index to it better than I did with a previous Gen II G23 that I had. However, thare are certainly many experienced and knowledgeable Glock users who feel exactly the opposite. If you can, try one of both Generations, and see how they feel/point/index to you, and then make your decision accordingly.
Glock is very good on providing upgraded parts at little to no cost. The easiest way is to attend a GSSF match, where the attending GSSF Armorer will thoroughly go through your Glock and provide upgrades at no cost. Alternatively, you can send it to Glock (but you’ll have to pay shipping, at least to Glock).
If you’re in law enforcement, your department armorer should be able to go through it for you, or the Glock Regional LE Rep when he visits.
An additional factor to consider is price-if you fit within the definition of a Homeland Defender/First Responder/Military/LE/EMT (usually active, reserve, or retired in any of these categories), you can get a new Glock of your choice at both a hefty discount and with 3 magazines (at least concerning the full-size and compact Glocks); Alternatively, you can join GSSF for $35, and request a certificate (which enables you to buy 1 Glock at the same discounted price, but with only 2 magazines, and only from select participating LE dealers)-see www.gssfonline.com for details, or call Glock at (770)432-1202.
If you find that you prefer the Gen II to the Gen III, I’d go for it (also assuming you like the price of the Gen II).
Otherwise, I’d recommend going the Gen III route.
Best, Jon