Nikkor 105mm f/2.5 AIS
The Nikkor 105mm f/2.5 has a long history dating back to the 50's, going through many iterations till it was discontinued in 2005. I'll spare you the details of its history because there are better sources for that. You can read more about it here. The lens used in this review is an AIS from the higher end of the serial range before the SIC coatings came in.
Fully metal body
f/2.5-f/22 all full stops (with a half click in between f/2.5 and f/4)
Focuses 1m to infinity
Accepts 52mm filters
Built-in hood that clicks into place
Front element doesn't rotate as you focus
Front element is slightly recessed
Nikkor 105 f/1.8 AIS
This is considered by many to be one of Nikon's exotic lenses, not in terms of rarity, but in terms of what it was designed to do. It's Nikon's fastest telephoto lens (though short-tele would be a better description). Its productions started in 1981 as a native AIS lens and, like the f/2.5 AIS, it was also discontinued in 2005. I am unsure as to the coatings on this but do believe they are NIC, even those lenses produced in 2005.
NIC coatings (?)
Front element doesn't rotate as your focus
Front element is more recessed and larger than that of the f/2.5
105mm f/2.5 AIS
The 105mm f/2.5 is small and easy to focus. It's so small that you could easily put it in a coat pocket.
A bonus of this lens is it takes 52mm filters; those are plentiful and cheap! You can pick up an older B&W CPL for less than $30 at places like KEH.
It's so easy to turn the focus on this lens. It is possible to actually turn it with one finger. While that's not practical for most shooting it goes to show how buttery smooth the focus is on this lens.
The built-in hood is handy and makes having a rubber/metal screw-on hood pointless. The only problem with the built-in hood is there's no way to lock it; for some this may be cause for concern, but for most it's a non-issue. It clicks in place, but it's too easy to knock it back. Having said that, do know that the hood would have to be touching something that could knock it back in place. That's why I said for most people it's a non-issue.
The image produced in the viewfinder by this lens is bright, clear, and comes into focus much quicker than does the image produced by 105mm f/1.8. I found myself actually preferring the focus of the 105mm f/2.5 simply because things appeared to come into focus much faster and the image in the viewfinder was as equally bright. The way this lens renders backgrounds is real nice, but not as nicely as does the 105mm f/1.8.
105mm f/1.8 AIS
The 105mm f/1.8 is a chunk of fine glass and it's heavy and it's not easy to focus.
Unlike the 105mm f/2.5 this lens takes 62mm filters, which are not as cheap as 52mm ones, but neither are they super-expensive. The downside to this is few lenses use 62mm filters, so it just means another expense due to not being able to share filters (unless you decide to use a step-up ring with 72mm/77mm filters).
The focus throw appears to be the same between the two lenses, but it's much stiffer with the 105mm f/1.8. There's no way to move the focus of this lens with a single finger. This may be good for precise focusing because it means you have to take your time to properly focus your subject. For some this issue may be a deal killer, but for others it's a boon. I didn't like, but I can see it coming in handy with video work.
Like the 105 f/2.5 the f/1.8 lens has a built-in hood that doesn't lock. It clips into place, and can also be knocked back into place. It helps, but due to the larger element and optical design this lens tends to flare more.
The image produced in the viewfinder by this lens is bright, clear, and comes into focus more slowly than does the image produced by the 105mm f/2.5. However, the resulting images from the 105mm f/1.8 produce better rendered backgrounds when shot wide open--they are more gaussian than those produced by the f/2.5 lens. In other words the 105mm f/1.8 produces better bokeh.
Both lenses are sharp. The f/2.5 lens (at least my copy) is sharper than the f/1.8. However stopped down to that strange half-way stop between f/1.8 and f/2.8 the 105mm f/1.8 is right there neck and neck with the f/2.5. By f/5.6 both are as sharp as the other. You don't buy these lenses to use them at f/5.6 at all time. There are times when you'll want to use their sharpness to your advantage, but most photographers I know want to use them to rip their subjects from a background. I'll let the photos speak for themselves:
This is where the lenses really differ. To my way of seeing things the f/1.8 produces much nicer bokeh than the f/2.5. Is it worth the big difference in price? I would say it isn't, but if bokeh and great low-light performance are what you're after it may be worth it. Price have come down recently, and my guess is they won't stay there for very long. Now would be a good time to pick up either of these lenses, just don't pay more than $350 for the f/1.8 and more than $220 for the f/2.5, unless they are in pristine condition.
Both flare pretty badly. The f/1.8 more so than the f/2.5. However, what I did was extreme, and in my test the f/2.5 had the lead here. This is probably due to the smaller front element and the hood design. The f/1.8 has flare that reminded me of the Samyang 85mm f/1.4...big and useful in certain situations. The f/2.5 flared, but it's something that could easily be fixed in post.
The f/1.8 produces tons of CA. The f/2.5 produces less CA. The photos I took are a bit extreme, but they show just how different these lenses are.
The f/1.8 produces beautiful stars, and so does the f/2.5. There is no clear winner here. Wide open at night the f/1.8 produces so much more choma so it looks soft. The f/2.5 produces less so it looks sharper. In low light I would much rather use the f/2.5 because of this
This is a tough call to decide between these lenses. Each one has different strengths, and each one serves a different purpose. I would venture to say that for most people the 105mm f/2.5 is the best option simply because it's cheaper, lighter, and it's easier to focus. For those who work with video the 105mm f/1.8 may have some advantages over the f/2.5 because of its stiffer focus and its greater light gathering ability, and how nicely it renders backgrounds, and how large it flares. Again, it's a tough call to decide between these two. If you travel and want something light the f/2.5 makes more sense; I believe it's the lens Steve McCurry used to take his famous Afghan girl picture. The f/1.8 is heavy, and that's why I think it would better serve the video crowd than photographers. In terms of ripping subjects from their backgrounds the f/1.8 does a nicer job, but not nearly enough to justify the price difference between these two lenses.