I've had a copy for awhile now and never got around to playing it really. Finally decided to play it since it was released on PSN, and the servers were set to PWWT.
It was a very enjoyable game. I especially like the atmosphere of the Demon Souls. In Dark Souls, every new enemy just feels like an obstacle I have to overcome. But in DeS It felt like the enemies were actually trying to kill me, and it was terrifying. Tower of Latria gets a special mention for having the best atmosphere of any level I have ever played hands down.
However I did not feel the level of difficulty I have been reading about. Maybe because of the PWWT, or maybe because I had a faith build and just cheesed everything with Istarelle and Greatsword of Moonlight. King Allant was hard, though.
The upgrade system was very confusing. There was like 20 different kinds of stones, and the game never cared to explain to me what they did. The versatility of it was nice, and I would like to see something similar to it in DkS2, minus all the confusion.
Demon's Souls is awesome. A lot of the difficulty really comes from the lack of explanation. Demon's Souls allows for some very powerful builds that allow you to breeze through the game. On my platinum character I just did hypermode + second chance and went through all the NG+ cycles in one day.
Playing Dark Souls first also makes the game easier as you know what to expect and your combat skills carry over.
As an aside: I was funny killing Allant before he could even do anything with my hypermode + cursed weapon + quality knight sword. If you wait to the side of the stairs, he'll slowly walk then turn around and stop. After that, you can just run up to him and get a long combo in. In NG he died at the end of the combo. In NG+ I just need to hit him a few more times.
The NPC's did feel noticeably more difficult. Even when not not in PBWT. The Old King in particular was really hard for me. I would like to see this carry over into Dark Souls 2.
And I understand what you mean with skills carrying over, and I agree to some extent. But most of the bosses just didn't feel very aggressive to me, and it seemed like they only had like 2 attacks. All of which were very readable. The only bosses I think I died on period was King Allant and Maneater.
I'm not complaining or anything. I loved the game. I'm just stating what I noticed.