I'm making no comment at all on which regime I like better, rule under the Shah or the current Shia Theocracy (short answer: they both suck), but on purely aesthetic grounds, I think the current official flag of Iran looks better than the one with the lion.
The lion and sun, evoking ancient Persia, in the top flag is not bad. But I really think it is exceeded by the cleverness of the bottom flag. I like how they made a hyper-stylized version of "Allah" look like a tulip in the center of the current flag. I also like how the border between the two colors looks like some kind of complex embroidery, but is really the Takbir written in Kufic script over and over. I'm also a firm believer that flags tend to be worse when they go beyond three colors. They could have made the Allah/Tulip gold, like the lion and sun were in the prior flag. But using one of the basic tricolors from the flag is just a better choice. (I'm not sure why they made the center Allah red and not green though).
Again, the post-revolutionary regime in Iran is awful. But I think their design choices were more clever.
