At its most basic level, a utopian society is a perfect society, the best of all possible worlds, envisioned by a person in the present, looking into a future which is hopefully better than today. A dystopian society is a society that has all of the bad elements of the present, only worse, as envisioned by a contemporary observer projecting his insights into the future. The society of 1984, as portrayed by George Orwell, has both of these elements. The present seems evil in the eyes of the contemporary reader, but given what the characters have suffered in the past, the society has utopian elements as well.
On one hand, the society of the novel is profoundly dystopian, because it rests upon lies. The government lies about the fact it is at war, simply to keep the people frightened, as Julia sniffs in Chapter 5. When the government decides: "Oceania was at war with Eastasia: Oceania had always been at war with Eastasia," even though this is not true, it becomes 'true' in the propaganda and the past must be officially forgotten as it is rewritten (Chapter 10). The world speaks Newspeak, a language allegedly better than standardized English, but in reality a language entirely drained of all humanity, carefully policed and edited by the government.
The people accept this, because they have no choice, anyone who shows any individualism becomes like Syme, a nonperson. However, even before the government came into being, life was hardly perfect. Instead, a different type of horror existed: "He [Winston] remembered better the rackety, uneasy circumstances of the time: the periodical panics about air-raids and the sheltering in Tube stations, the piles of rubble everywhere, the unintelligible proclamations posted at street corners, the gangs of youths in shirts all the same color, the enormous queues outside the bakeries, the intermittent machine-gun fire in the distance-above all, the fact that there was never...