If you want to alter the attributes dict before the class is created, or change the bases tuple, you have to use __new__. By the time __init__ sees the arguments, the class object already exists. Also, you have to use __new__ if you want to return something other than a newly created class of the type in question.
On the other hand, by the time __init__ runs, the class does exist. Thus, you can do things like give a reference to the just-created class to one of its member objects.
Edit: changed wording to make it more clear that by “object”, I mean class-object.