To blink them on and off replace delay(500) with something like this:
starttime = millis();
currenttime = millis();
while (currenttime < starttime + 500) {
digitalWrite(led1, LOW);
digitalWrite(led2, HIGH);
delay(25);
digitalWrite(led1, HIGH);
digitalWrite(led2, LOW);
currenttime = millis();
}
or if you want them to get brighter and dimmer, so the same thing, except:
...
analogWrite(led1, 128);
analogWrite(led1, 255);
delay(25);
analogWrite(led1, 255);
analogWrite(led1, 128);
...