It is only a bit of an improvement to Tekken 4.
Arcade mode lets you play and earn money, which you can buy costume upgrades to fully pimp out your favourite character with.
New characters and slightly better graphics, both character-wise and environment-wise does not necessarily make the gameplay better. They've taken most of the good aspects out of Tekken 4, and added some new ones. Craig Marduk, King and a few others can now grab opponents in mid-air. It doesn't matter which way they are facing, just as long as you grab them. It makes a nice finish to a juggle combo.
Feng Wei, Asuka Kazama, and Raven are the new characters, although Asuka Kazama is really just like playing as Jun Kazama in Tekken 2/Tag. Feng Wei is an interesting character, he has some interesting moves that look great but take too long to perform, leaving him vulnerable. Raven reminds me of playing Mortal Kombat: Deadly Alliance. His moves are also rather good looking, but learning how to use him properly might take a while, since he often ends up with his back towards the opponent.
Jinpachi Mishima, Heihachi's dad, is the boss. No you can't play as him (unless you have an Action Replay or something). He's actually a challenge this time. You'll have to take full advantage of side-stepping as he can shoot fireballs out of his stomach which instantly knock off half of your health. He can stun you quite easily, and his regular kicks and punches are quite strong.
Devil Within is an interesting game. Think of Streets of Rage or Double Dragon, or if you aren't that old, think of Tekken Force from Tekken 4.
Not much of an improvement, but still the best.