50 hp, that's the difference.
1ZZ, found in the base and XR models. 2ZZ in the XRS.
1ZZ is a 1.8L I-4, that has VVTi and makes 130hp. Variable Valve Timing with Intelligence. That's continuously variable cam timing to optimize engine output depending on load and speed.
2ZZ is a 1.8L I-4 that has VVT
Li and makes 180 hp. That "L" means lift, and makes all the difference. AT 6100 rpms the engine switches to a high lift cam which has all the advantages of a traditional aggressive cam (more air in + more air out = more hp) without comprimising everyday drivability with a poor idle and low-end torque (relatively speaking) because the engine operates on the regular cam at low engine speeds.
The 2ZZ is also has a slightly different bore/stroke. A bit more square. The cylinders are coated with MMC (I think that's the name?) to reduce friction without comprimising durability. The compression ratio is also increased to 11.5:1 and it requires premium fuel. All of that adds up to a higher, more freely revving engine.
The 2ZZ was devloped for Toyota by Yamaha, and the exhaust on the XRS was engineered by Yoshimira.
Others will chime in and fill in anything I've left out, but that's the basics.