Thank God, yes, that was better than last week. :-)
I like Ianto as silent background character. Please, let him be that way. I still feel traumatized by his whinebitchmoan!performance last week. And the slashiness between Jack and him is back. <3 ("You shouldn't be here." "Neither should you." ... Can anyone please write good fanfiction for those two?)
I'm almost a bit disappointed that Jack had a long-time girlfriend and not a boyfriend.
The ideas with the fairies was nice but the story felt a bit thin. Maybe a double-episode would have been better. It's hard to create a new mythology within 45 minutes. But I really liked the fact that Torchwood didn't win this time. That makes the whole show more realistic (and Jack a bit more Doctorish).
I also missed a bit more Rhys in this ep. I mean, his girl is slipping away from him and we don't see any reaction at all. On one hand, I am glad that he doesn't leave her because of this, but on the other hand, there could be a bit more conflict.
So, all in all, this ep had great potential and they could have made more out of it, but the way they did it was okay. :-)