Okay first off, bear in mind that both CAFS and Society and Culture have 'major projects', CAFS being the IRP and Society and Culture being the PIP (I don't do either of those subjects, so you'll have to ask around what both those projects entail in year 12. Though, with your current mix of units Modern or Society and Culture would do nicely.
Also, if you decide with Modern there is also the possiblity of picking up History Extension year 12 (which is a fantastic course as well!) n_n
In terms of your questions:
-Is it interesting?
It depends on the person, but yes I find it to be extremely interesting, both the preliminary and HSC course.
Nice variety of topics to study, which gives for a broader scope of learning and experiences.
-Does it scale well?
It comparison to other Humanities, yes. But in terms of all the subjects, its about average.
-Do you have to write a lot of essays?
Yes. But both Society and Culture and Modern have huge contents and strenuous essays. In the HSC exam, you are required to compelte two 25 mark essays, two 10 mark essays (one being a source analysis) and one 15 mark essay, along with multiple choice and short answer. Sounds like a lot, but it's actually not too bad. I find it much better structured than Ancient.
-What are the main topics covered in the prelim and HSC course?
This you'll have to check the Syllabus. There's a HUGE range of topics to chose from for both Preliminary and HSC. Usually in year 11, teachers will ask what students want to study and go from there, though in year 12 they do stick to what they'e taught previously. Best way to determine this, is to ask current year 12 students / or the teachers what is being taught, then you'll have a better idea.
Oh, and you have a historical investigation in year 11, pretty much an assignment where you chose the topic and the question, its very much 'your-choice' and has a lot of freedom.
-Do you think I will be able to cope with it considering I didn't pay attention much during Year 7 - 10, so is there prior knowledge you're expected to have? I got an B for History on my report.
Yes.
Virtually nothing carries over from years 7-10. Well, I lie. Skills such as source analysis are still imperative, but teachers will run over that. And if you can remember what a primary and secondary source is, you're set! n_n
-Are there a lot of difficult terms to learn?
Depends on the topics. We study Germany this year, so a few German words, easy to learn, difficulty is the spelling.
-Is it better than Ancient in your opinion?
Varies from person to person. I like Ancient more, less war based.
Modern (especially year 12) has been greatly based on World War I and World War II, and the constant conflict grows unbearable to sit through lesson after lesson.
In the end, it is up to you.
Best thing is to have a look at the syllabus talk to some current year 12's at your school (they can tell you what's been taught, and how well!). Also remember to keep in mind the major projects you'll have from CAFS and Society and Culture, and the possibility of picking up that extension unit in year 12. Good luck with your decision.