Assuming axles and differentials are stock - you have a better chance of grenading your diff in the earlier models, which is a recurrent issue with these cars. There are actually 4 generations of differentials that GM has produced for our cars, with each later generation being a little improved over the previous ones.
-LS2 makes more power in the lower rpm range
-Diff is revised to be stronger
-Trans is revised to shift smoother
-5 year/100k powertrain warranty
The thing is, these are small improvements, and there is a cost associated with buying an '06+ vs an '04-05. There is nothing wrong with the earlier cars, though. To answer the question you asked, yes the '06-07 is better. However, only you can decide if it is preferred.
Edit: also, if you care about colors, the V didn't come in color until '05. '04 was only available in black or silver.
Just look at the full service history from Cadillac on any car you buy. I'd stay away from any car that blew a bunch of diffs whatever the year. I wouldn't buy any car someone beat the snot out of. There are TONS of cars out there that never blew a diff.
The year doesn't matter to me, some folks like the LS2 some prefer the LS6. I've heard the LS2 gets better MPG.
I never heard the '06 is better than an '05 before other than MPG. The '06 cars will pop rear ends if you beat on them like an idiot as do the '05 cars. At this point any of the early cars that had a weak rear end were probably repaired long ago.
^The LS2 engines certainly don't get better gas mileage than the LS6s (as if mpg even matters on this car). Also, just because a car has had a diff or two replaced doesn't mean it was beat on or broken. Many people got diff replacements due to whine only. I was happy to have found a car that had a diff replacement to a 4th gen. It is whisper quiet and holding up fine so far.
If you can get one of the Gen 1 cars (04-05) for the right price you can’t go wrong. I have a 2005, I upgraded to the latest diff and replaced the clutch and tranny with the help of Cadillac (5-6th gear vibration) and have a great car with less cost than the later models. I have right at 18K invested with 68K on the ODO. Shop around and you may be surprised what you find. You may find many of the Gen 1's have the diffs upgraded under warranty. Also work with your local dealership's service department, Cadillac helped me with the tranny replacement with 65K on the car... Good luck looking!
You have a good example, a late car with a replaced diff. What I'm saying is avoiding the early cars because the later cars have better diffs is silly. A very small percentage of ALL V1's had a diff issue. I happen to believe that contributing factor is driving style so I stick with "avoid cars that have had multiple diffs replaced". One diff? Who cares, but not several. People used to get their diff replaced with the "Gen 2 or 3" and then pop it anyway. Driving style matters in a heavy car. If you're gonna go around dumping the clutch and doing lots of full throttle launching not respecting hefty weight of a V1, it's gonna blow the diff whatever year your V1 is.
I get 11-13 MPG around town and 19-20 MPG on the hwy out of the LS6, I have a heavy foot. I've seen lots of LS2 owners claim better, but I don't know for sure since I don't have an LS2.
I'm also at 65,000 miles on the original diff in my '05.
There are some other very minor differences. In the 04-05's I believe the cruise controls were buttons on the steering wheel. In 06-07 (I know for certain in my 07) the cruise control was moved to a stalk off the steering column and the buttons on the steering wheel now are radio controls. I think I also read somewhere that some of the grounding points on the wiring harness are better/were improved and have helped to eliminate some of the minor electrical issues that would s how up on the earlier models. I think the 07's were also the only model to feature that small square silver GM badge on the sides of the car just behind the front wheel wells.
I found an 04 with an upgraded differential and 10,000 miles on the clock. I found many that were thrashed before I found mine. Take your time, drive a lot of them, and you will discover what is right, wrong and worn. I paid $22000 for mine and to date have only 26000 on it. The price of an 04 can be several thousand less than an 06 or 07 and deliver the same fun, provided it's not beat.
Lots of good feedback here. I think price is a big consideration. Though, it may be difficult to find an 04-05 with reasonably low miles on the clock. This may not be of concern to you, but I have heard that the larger engine displacement in the LS2 allows for better gains with engine mods. Not sure if I buy that when considering a 5.7 vs. 6.0 liter, but I definitely think it explains why the V makes better power gains vs. a Mustang with the same mods.