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Like most any technology, the initial version of XSLT didn't cover all the needs of XML applications, and it fell behind as technology advanced. XSLT 2.0 attempted to address these gaps. One of the biggest issues was that XSLY 1.0 did not work with XML Schema. XSTL 2.0 added that support. XSLT also added additional support for data types beyond its initial five, including types defined by users in schemas. I'm pretty sure the added support for REgular Expressions was welcomed by programmers of all stripes.
As with XSLT, XPath 1.0 was limited by its available data types. XPath 1.0 had four. XPath 2.0 not only supports the XML Schema builtin data types, like XSLT 2.0, XPath 2.0 also allows user-defined data types. XPath 2.0 adds more built-in functions and operators, and replaces node sets with sequences.