Graphics - Burnout 2 hands down. I think BO2 is the best looking arcade racer on any plartform. Rock solid 60FPS, progressive scan support, very high polygon count (resulting in high traffic activity and amazing looking crashes), very respectable textures, quite impressive lighting with great looking, and sometimes 'blinding', glare on cars, road and the scenery. Many people on the tradeshows couldn't believe the game was running on PS2, and that should tell you something.
On the other hand, NFS has licensed car models, which generally look better design wise and are also modeled very well. NFS also has great looking tracks with colorful scenery, but where it loses against BO2 is the framerate (good, but not rock solid) and aliasing (again, not terrible but BO2 looks much smoother and sharper) Another thing NFS has and BO2 doesn't, is a slick, well produced intro FMV.
Gameplay - both games are really good, and are quite different. In BO2, reckless driving (slipping close by other cars, driving in the opposite lane) is increasing your boost meter. Once you fill it up, you can activate it, and experience the wipeout kind of speeds. Control remains very tight and manageable even at the highest speeds, though. There is also a mode where you drive police car and have to chase down a runaway car and slam into it enough times to make it stop (kinda like old Chase HQ game) Third distinctive mode in BO2 is the 'crash' mode where you are given a scenery with lots of trafic that you have to slam into and cause as much carnage as possible. If you do it well enough, you progress to a next level. Later levels have a puzzle quality to them because you have to think where to crash and under what angle to accomplish enough damage.
NFS has simillar modes (police chase, racing) but I think it offers somewhat greater variety in track designs, as you can take various shortcuts, and you always have the police to take care of. Police is also attacking you in some creative ways, throwing flaming barrels at you from the helicopter, and even firing missiles. As I've said, both games are really, really fun, and it's hard to say which one has better gameplay.
Sound - both games support DPL2 surround and sound very good. Crashes in BO2 sound frighteningly real in surround sound. Music choice in both is solid, and I'd say there is something for everyone. I think NFS uses licensed music from the less known rock bands.