For this exercise I use the power rating that is the single most important part of the model I use to predict game scores. By this measure, Western Kentucky is the nation's most improved team. Last year the Hilltoppers were 1-4 through 5 games with the only win coming in overtime against Middle Tennessee State. This year they are 4-1 with Alabama as their only loss. ULM is also much improved from last season, though their success this season against BCS programs was also a result of two of those teams falling to near the bottom of this list. The Sun Belt has four teams in the top 11 and five in the top 18. New Mexico is the third most improved team despite still just breaking the top 100. New Mexico was really, really, really bad last year. (Akron was worse. Akron is more than a touchdown better than in 2011 and is still the 112th best team nationally.)
Looking at the bottom of the list you find a number of teams that lost a good quarterback, a coach, or both. Boise State 2011 would beat Boise State 2012 by 16, but Boise State 2012 still manhandled Southern Miss 2012 because Southern Miss 2012 is 19 points worse than Southern Miss 2011. The SEC West has three programs in the bottom 15. Washington State is significantly worse despite the arrival of the Leach.
In my mind the biggest story is Utah State. Despite everything the Aggies lost (much of it to the NFL) from a solid if ultimately disappointing 2011 team, the 2012 version is 9 points better than in 2011. I assume this is largely because the 2012 version is more healthy, but it also strongly suggests that Utah State is building a real program in Cache Valley.