OK then, so far, this is what I've found. The 16-85VR betters the 18-70 at the shorter FL(
18mm), especially at the
shorter distances (less than about 4m) and the corners are definitely better.
The contrast too, is better with more 'bite' and clarity.. At longer distances (infinity) the difference are'nt that great and I would call it a tie. I need to get out and test more (at infinity).
At
70mm f/5.6 the 18-70 looks to be a tad better, but the difference is small. It's probably that the VR lens is wide open at f/5.6 whereas the 18-70 is stopped down a little at that aperture. BTW, using the identical settings on the D300, the pics from the 18-70 are about a third of a stop brighter. Colour-wise, the VR lens is a little more saturated, by about a few percent.
I must add that I bought the 16-85 mainly for the VR feature. I was quite surprised by the price

but the ability to shoot at the slower shutter speeds without flash is a difinite plus point for me - I have taken shots (24mm) indoors at 1/5 sec. that are tack-sharp. I could never do that without the VR. If I was going to shoot indoors especially at the wide end without flash then the VR lens is better by quite a fair bit.
So is the 16-85VR for you? Gee, that's a tough call. The 18-70 is a pretty decent lens for the price, but as usual if you want a little better you gotta shell out those big bucks

Why must life be so complicated??