Answer: The King James Bible, so called because it was commissioned by King James I of England (born 1566 A.D., died 1625), was published in 1611 A.D. It is also known as the Authorized or Common version. Forty-seven scholars from the Church of England worked on it. Though four hundred years old, the KJV still remains one of the most popular Bible versions sold.
The Old Testament of the King James Bible is based on what is called the Masoretic text, while the New Testament is based on the Textus Receptus. The translation method used is called Formal Equivalence, meaning that the translators attempted to translate the source text they had available, word-for-word, into English.
Many biblical quotations you will read in articles and listen to in sermons are from the KJV. Some long time Christians have used this Bible for so long that they just hate to change.
Many of the best concordances and other helps are based on the King James Version Bible. These include Strong's Concordance, Vine's Complete Expository Dictionary of Old and New Testament Words, The Englishman's Hebrew Concordance of Old Testament and The Englishman's Greek Concordance of New Testament. Unfortunately, English has changed so much since 1611 that this version of God's word simply does not mean what it did four hundred years ago.
For example, the KJV uses words and phrases like "afflict your souls" in Leviticus 23:27, "charity" in 1Corinthians 13, "divers" in Matthew 24:7, "iniquity" in Matthew 24:12, "mammon" in Matthew 6:24, "publicans" in Matthew 5:46 and "slept with his fathers" in 2Kings 13:9. In today's language these mean (in order) fasting, spiritual love, different places, lawlessness, riches, tax collectors and being dead.
The NIV was originally published in 1978. Today it is the best-selling version of God's word in the world. Fifteen Biblical scholars made up the core team that produced the NIV, with additional scholars from various denominations around the world also participating. The translation method used is a mix of Formal Equivalence (mentioned above) and Dynamic Equivalence (which attempts to translate the thought expressed in the source text available using equivalent expressions in English).
The NIV is becoming the closest thing to a standard Bible among evangelical people in the United States.
Some scholars feel that the NIV takes a balanced approach to the Bible. However, since it uses the dynamic equivalence (thought for thought) method it can create some theological problems - especially in the interpretation of what the apostle Paul taught.
It is difficult to trust the NIV in all instances because of certain prejudices on the part of the translators. It should be compared to the KJV and several other translations to assure accuracy. It is, as you note, much easier to read in many cases and even helps clarify the Old English language. In the final analysis, a person can use almost any translation of the Bible and, if enough attention is paid, find the truth.
The Bible is multiple-redundant, meaning it reiterates its most basic principles over many books with different authors, so that one may find the discrepancies in translation by comparing other texts. You may wish to use the KJV as a primary study text and read the NIV for its fluency and use of the current language.