Is there benefit in playing at higher difficulty levels?

You definitely get higher level weapon drops.

A friend and I grinded weapons on the first level at a higher difficulty, and our weapons received were on average about level 22 or so. It's a nice way to get weapons for late game while only having to fight giant ants (giant ants with ridiculous amounts of hp, but still not too dangerous).

I didn't particularly notice a higher drop rate or different enemies, but then again I think we were only playing on hard, not on Inferno or anything.