Could you elaborate on that? (Better and darker vs. not living up to potential) I haven't read the DS 4e books.
Well for one thing the atlas section of the cg is 3rd person as opposed to 1st. The presentation of the first set really acts as a bar to the cool grittiness of the setting. The 4e atlas is, in my opinion, just better, and it is objectively far more concise. As far as darker goes, I think the descriptions of the cities and wilderness and the types of things that go down in them is just hits the note better for me. Also Brom's absence aside, the interior art is superior in the 4e books. Beyond that, the writing is just better, I guess. I really dig the creature books from both iterations, though.
Also WoTC's two and out book policy insures that the setting will not be fucked up with kruft and hope down the road.
I'd run this game with S&W WB, some house rules, Carcoasa psionics and 4e fluff.