They are both wireless routers or access points. The AirPort Extreme can address 50 DHCP users, while the Express can only address 10. I don't recommend the AirPort Extreme. It's extremely overpriced, and in my experience, doesn't work too well (range problems and drops signal constantly). The only thing AirPort Express has going for it is that it can stream music wirelessly to a stereo. If you're not going to use this feature, just get a Linksys WRT54G wireless router. I've installed tons of these, and they work great. They're rock solid, and have lots of great features.
Anyways, I'm not trying to bash AirPort, but from experience, I'd go with another company for wireless products.