as far as I know, the CRecorder II has updatable firmware, which I assume means that you should be able to get it to work with newer cars as they come out. I have the first version and I know there are some cars that it won't record properly, or you would take it for a 1/2 hour drive and only 10 min would show up when it's uploaded
I just tried to update the firmware on my CRecorder I and it failed. Tech support said that only the II could be updated, but didn't say anything more about it. In particular, they didn't mention anything about ugrading the old unit to a II, so I assume it involves new hardware.
The way I understand it was, the biggest difference was the CR I could not read 1996-2002 Chrysler & Subaru models. Also, the CR I was not firmware updatable. The CR II solves both of these problems.
It is a physical hardware change so there is no software available to convert a CR I into a CR II.