I obviously have watched much more of Stepan than Paajarvi, so I'm most likely biased, but from my viewings of each:
Derek Stepan:
Pros: Highly, highly intelligent on-ice player, with elite level vision and creativity. Willing to go to the net for rebounds, and is usually in the right place for a pass behind the net tap in. Solid in his own zone as well. He's been used as a penalty killer on several occasions.
Cons: Weak along the boards. He's willing to use boardplay, but he's nowhere near strong enough at this point in his career to use it to his advantage, and for a player who is primarily a playmaker, this has hurt his passing game a bit, and taken away from his head-driven game. He's also got a really weird skating stride. It looks like he's swimming.
Magnus Paajarvi:
Pros: Also good in the intelligence department (not nearly as smart as Stepan, but it's still a plus from what I've seen), but he's much bigger than Stepan, which helps with boardplay and defensive hockey. Good passing, hands, and awareness.
Cons: At this point, his offensive game is somewhat underdeveloped, although he doesn't seem to be getting much of a chance from Renney. He's gotten next to no powerplay time form what I have seen. His shot seems pretty weak as well.