This week's book giveaway is in the OCPJP forum. We're giving away four copies of OCA/OCP Java SE 7 Programmer I & II Study Guide and have Kathy Sierra & Bert Bates on-line! See this thread for details.
The first one makes the variable point to an existing String; the second creates a new String. There is almost never (and by almost never I mean only in one or two very advanced cases that you're unlikely to ever run into) any reason to use the String(String) constructor. Always use your first version, not the second.