If you are a DX shooter, the VRI is probably one of the best pieces of glass you can attach the camera to. Unquestionably the leader in the 70-200 category. If you are a FX shooter, the VR1 still works great if you shoot anything other than landscapes. Only with landscapes do you notice the corner sharpness drop off relative to the VRII. If you use the lens for sports, or portraits, or anything else where there will be any bit of exploited depth of field, corner sharpness is irrelevant. The small bit of vignetting is also not very noticeable unless you are shooting the sky, and that can be corrected in camera or in post. Not only that, but many people intentionally add vignetting to shots in post to help emphasize their subject. I don't know of many people putting their subject right in the corner of the frame, but to each their own.

I see the need for the VRII, but I don't see it as the lens that killed the VRI. I don't think you can judge the VRI's FX ability without trying it on FX for yourself. Weather that is owning it as a DX shooter moving up to FX, or being a FX shooter and renting the VRI for a couple days to try it out. Or being a DX shooter and renting a D700 and VRI together and trying it out.

Regarding the "breathing" of the VRII, it can be rather significant at close focus. I believe Thom Hogan or DPReview did a comparison between the VRI and VRII lenses. You should be able to google that pretty easily.