Narrativly warhammer III is definitly better.
Warhammer II is better in the sense that it has had the time to mature, get some supporting DLC, patches, alternative game-modes ( e.g. mortal empires), mods etc.
If you really want a particular mod then for now stick with II until proper mod support is released.
Similarly, if you only care about mortal empires/don't care for the special campaign, or don't like the warhammer III starting races then stick with II till mortal empires is released.
As for genuine gameplay differences;
III has some much needed improvements to certain things; like the ability to trade regions. Which is good. However, it also takes away some things like searching for treasure in ruins, which is a shame. I hope those come back at some point.
It also brings some interesting concepts, like the build-a-daemon-prince-workshop, and the new faction abilities are fun (Stealing regions as Tzeentch is great)
The new sieges take some getting used to. But are overall, fairly fun. And I imagine they're especially good if you get to be the defender (so far I've only attacked)
It also makes minor cities much easier to defend as the player as now you actually have some decent choke-points and supportive fire from towers to work with alongside your garrison.
On the flip-side; as the attacker they're a bit of a pain, the maps I've seen so far lack open spaces for manouvering, or even setting up a wider frontline, as the attacker, and taking an alternative route to flank an enemy requires walking across half the map. So it tends to devolve into a big blob in a chokepoint as you try to push through to reach a control point with the occasional flyer attempting a flanking attack, especially in the early game.
The new races are fun, so far. But I haven't played with all of them yet. And it's a safe bet that some of those will need some love at some point. But it's a decent starting point.
There's some bugs here and there which is annoying, but nothing major so far. And there's also some things that need a balance pass (e.g. early game daemons have basicly no armour, which is fine when you're fighting empire swordsmen or marauders, but kind of problematic when a random stack full of wood elf archers shows up and they just shoot everything before you ever get into range)
Also, in terms of starting lineup, 3 actually does fine despite the starting line-up being kislev, ogres, cathay and 5x chaos. The various chaos factions are sufficiently different in terms of campaign mechanics as well as general unit design and not just recolours of eachother.
Other than that it's more of the same really, which shouldn't come as a suprise

Imho, the mods & availability of your prefered race are currently probably the biggest factors when deciding which one is better

Once warhammer III has had some time to mature, and the missing bits from II have been ported over it'll definitly be the better of the two.