The DO lens has two advantages, only one of them related to DO.
By using Diffractive Optics (DO), the lens can be made shorter then it would otherwise need to be. So if you want the smallest possible 70-300mm lens, the DO would be it.
In this case Canon put a real ring USM motor in the 70-300 DO lens, which means fast and silent AF, full time manual focusing and a non-rotating front element. Thi sis incidental to the use of DO of course.
One downside of diffractive optics is that when used wide open in bright light, especially on backlit sunbects you can get a soft "halo" arounf bright objects. DO cxan also result in some structure (rings) in out of focus highlights.
Overall, unless you really need the smallest (shortest) possible lens, I'd say the 70-300/4-5.6 IS id a better buy at half the cost of the DO lens. Though longer, it's actually kighter then the DO.
See
http://www.bobatkins.com/photography/reviews/ef_70_300is_review.html for my detailed review of the 70-300/4-5.6IS
I also have a brief review of the DO lens (and comparisions to alternatives) at
http://www.bobatkins.com/photography/reviews/70-300do.html