There are a couple of significant differences between php 5.2 and 5.3
This site gives a good breakdown between the two...

Differences between 5.2 and 5.3

The general rule of thumb is to always go with the higher version

hope this helps

yes, there are some good plugins which require PHP 5.3, if your server doesn't have it, you can't use it. It's always good to go with hosting company that remains updated.

if you are using pre-existing scripts developed for < 5.3 you might run into some problems.

PHP: Backward Incompatible Changes - Manual

Always go for servers with latest stable version (highest) of PHP , as most of the free open source scripts are built to work on them.
Though most scripts come with backward compatibility , its better to go with higher versions.

Old scripts could technically have problem with 5.3, but that is really unlikely. New scripts having trouble with 5.2 is more likely. At this point of time, most scripts should work on either, but in near future expect the latest versions of scripts to have some issue. Given a choice, go with newer one, even though it is not really an issue now.

Best to go with the highest version of PHP, so you can use latest scripts with no problems.

PHP 5.3 is more stable and supported by most of the scripts.