Nikon J1 or Nikon J2?

Which one is better and why?

Nikon j2 because is the upgraded version

Neither. These are both EVIL cameras that are way over rated, extremely over priced pocket toys with no view finder that just happen to change lenses.

If you want a "real" camera, as I read from one J1 buyer, get a dslr.

There's not a lot of difference. They both use the same sensor. The most significant improvement of the J2 is the improved LCD viewing screen resolution.

The J2 being a newer model has a few small improvements. But as others pointed out it aren't HUGE improvements. In the basis the camera has stayed the same in so many things that well.

Lets just say a cheaper J1 leaves more money for the lenses. So a J1 + lens is better then a more expensive J2

Jim is right on this one. Why he got thumbs down is beyond me. The J1 doesn't even have a viewfinder or hot-shoe!
If you're serious about photography, Look at a D3200, or D3100.