No, I don't feel cheated. watchOS 3 (at least as of the current beta version) is faster & better than previous OS versions on my original launch day watch.
My watch is mainly used for notifications and activity tracking (and, of course, as a watch).
I don't play games or use any graphics-intensive apps on my watch, so not sure how the new GPU will benefit me.
I don't need the swim water-resistance, so I'm ok there.
I don't necessarily need a brighter screen (on rare occasions the watch has been a little hard to see in bright direct sunlight, but definitely not worth a $600 upgrade for just that).
The battery does just fine for me - easy to go 24+ hours.
And I don't really use too many apps on the phone - Carrot Weather, Maps, Messages, Mail, Find My Friends and Home are really the only ones I use on any kind of regular basis. So while the faster processor might show some slight improvement in load times or response, I'm not feeling the need to upgrade because of that.
Perhaps I'll upgrade to the "series 3" at some time a year or so from now, but I'm still satisfied with my OG Apple Watch.
Besides, I actually have two - a 42 mm stainless/sapphire and a 42 mm gold aluminum sport. I wear one or the other depending on which matches for the day.