It basically comes down to the R2 attack. The Iaito requires more DEX, so it's not well suited for elemental builds that want to keep the stat investment as minimal as possible. I personally prefer the Uchigatana's R2 attack.
Uchi has a very long-reaching R2 when you 1hand it. It's 2handed R2 relies abit more on luck to get a hit in.
It's been a while since I've used the Iaito but both of it's R2's thrust you pretty far foward - could be useful when the other guy is trying to use/cast something. It's slow but I can't remember exactly how slow it is.
Iaito R2 1-handed is a short hop forward while simultaneously drawing the sword from the sheathe for a quick left-to-right horizontal slash and has a shorter range than the Uchi R2 thrust attack. Iaito R2 2-handed is a pause, followed by a few step dash and the same horizontal slash.
I decided to go with the Iaito because I like its R2 attack better and you can still get access to a thrust attack by using R1 either while sprinting or following a backward roll. --- I guess the best way to describe Rez is if a DJ game and Star Fox had a baby, and that baby was on acid...
The uchi has a slight lead in power (and I do mean slight...its negligible) over the Iaito. The range is also slightly less than an Iaito...but again it is pretty negligible. As said earlier, the Uchi is better for an elemental weapon build because it has lower requirements. If you are doing a dex build though, I think the Iaito is better thanks to the more varied moveset. It has horizontal slashes, vertical slashes, and a stab. The Uchi has vertical slashes and stabs.
It really comes down to moveset preference. All other differences are negligible, except the aforementioned elemental weapon build.
The Balder Side Sword is better than both though IMO. Check that sword out if you are doing a dex build. --- "Vi Veri Veniversum Vivus Vici" PSN ID: FatBeezzee