Python 2.5 introduces several key features including conditional expressions that streamline assignments based on boolean conditions, the ability to use absolute and relative imports to avoid naming conflicts, and enhancements to generators allowing them to accept values and behave more like coroutines. Additionally, the 'with' statement simplifies resource management by ensuring that cleanup code is executed properly, and the contextlib module aids in writing context managers easily. Overall, these updates improve code clarity, error handling, and functional programming capabilities.