The major differences I see between them are that gwt-polymer-elements wrap polymer, which uses web components, which might be more future-proof if/when web components become the preferred/standard way to build UI widgets. Also, it not only supports paper elements (think material design), but Iron, Vaadin, and other elements out of the box, in addition to giving you a framework to include any other web components that you might want to create or include (externally available).
GwtMaterialDesign, wraps materializecss (js/css) which doesn't use web components to create the material design L&F (correct me if I'm wrong), but does have an edge right now as far as L&F, theming, and charts.
So I would pick gwt-polymer-elements if I'm into web components (or have some that I want to integrate--be it my own or third-party), or even if I'm concerned about future-proofing my app a little more (assuming web components are the future), but GwtMaterialDesign gives you more and better widgets right now, although *only* with the Material Design L&F.