PHP 5.3 introduces several new features including namespaces, late static binding, dynamic class names with __callStatic, shorthand ternary operator ?:, goto support, NOWDOC syntax, and the __DIR__ constant. It also includes a new Phar archive extension, improved ICU internationalization support, more flexible INI settings, use of MySQLnd by default, and enhanced garbage collection. Performance is improved through opcode optimizations and reduced system calls.