The Arc is in many ways better than its newer sibling, but not all. It has a higher resolution screen (1280 x 800), a higher resolution camera (1.3MP), a softer design with 2 front-facing speakers, and ships with more internal storage (16GB).
Of course, the older tablet is running an older version of Android Jelly Bean, and it lacks a card slot. It also only has a 1.5 GHz dual-core CPU, and not the quad-core CPU found in the Arc 7, so in some ways it does look inferior. But at $99, I can live with the older version of Android. And since I bet that the 16GB of storage is actually more than most people will need, the lack of a card slot probably doesn't matter.
And based on the demo video I saw on Youtube it's clear the 2012 Arc is more of a media tablet and less of a reading tablet (like the Arc 7), so I'm sure the front-facing speakers and generally better media abilities will be highly valued.
This tablet has garnered decent reviews over the past year, and now that it costs only half as much it could be argued that it is twice as good of a value. The 2012 Arc is available at several different retailers:
P.S. I don't know when I will have a chance to put my hands on one, but this tablet is on my todo list (after 4 or 5 other devices).