Dear Archmittal,
1. First, the level of difficulty of MGMAT is certainly higher than that of the actual GMAT, but that of the GMATPrep is definitely lower. However, GMATPrep remains the only test as close to the real thing as possible. If you are consistently scoring above 700 in the MGMAT tests, you are likely to crack the 700 mark, but you must always take these tests under the timed conditions only to derive the maximum benefit as also to get used to the real exam rush!
2. Second, I don't feel that the actual test has become harder (I have taken 3 tests over a period of 18 months). Just remember, they have hundreds of thousands of questions and do you think it is practicable to suddenly make them more difficult? GMAC has now introduced the Integrated Reasoning test which will replace the AWA and introduce new skills that the students are likely to encounter in the business schools on joining...the Integrated Reasoning test, however, will not affect the overall GMAT score! Moreover, the level of difficulty is increased by "layering" the very simple concepts and increasing the steps to solve the questions (in quants,for example)....the trick lies in unraveling the concept quickly. Those who have been following the evolution of the GMAT have realized that the level of skills of the students taking the GMAT has gone up & so has the overall score(in the last few years, the average score has gone up by more than 10 points). Earlier 750 used to be the 99 percentile, but now 760 is (99 percentile)! Frankly, I do not feel that the level of difficulty has changed, though the issue itself is a very subjective one. The level of perceived difficulty is directly proportional to your level of preparation/skill! I personally feel that the level of questions' difficulty has hardly undergone a metamorphosis in the last two years, though I'd like to invite views of experts in the field to give a more balanced opinion on the subject. It is but natural, though, for the weak students to come out with canards/red-herrings to hide their own insecurities & they tend to look for alibi....I have seen far too many of them talking about this moot point which is unlikely to pass muster/truth test!
That's what I feel...more views are welcome! Hope that helps.