I've got an Xperia X10 and later this year SE are upgrading the software from Android 2.1. to 2.3. I know that I'm going to lose features like face recognition and smile shuuter on the camera, and the back up & restore program. But what are the benefits and added features of Android 2.3?

More features came with 2.2 (Froyo) than 2.3 - such as wireless hotspots, speed improvements, support for MS Exchange, better gallery app, etc. Android 2.3 bought with it a (much) better keyboard and some improvements to power management (including a more detailed battery use overview).

See here (2.2) and here (2.3) for more details.

Here's a link to the official user guides, you can compare, get a run down on features.

http://www.google.com/support/mobile...en&topic=29927

I am running a custom 2.2 ROM on my rooted X10. The biggest improvement over 2.1 is the speed. The X10 flies on froyo and 2.3 will be even better. Full flash support is good too.

does 2.3 still have wifi hotspot?

Yup. Features don't generally get removed once they've been put in.

Another new feature in 2.3 is sound control in the music app, graphic equalizer and bass boost, you need to install a free app to unlock it though for some reason...

https://market.android.com/details?i...evibes.musicfx

Why should you lose them? They are Sony features, not Android ones. You'll find that Google will release 2.3 to the hardware vendors who will then add their own tweaks, and then they'll release the modified version to the network operators. If Sony add those features to 2.3 for their phones there is no reason why you shouldn't get them.