Alright, here are the differences:
Boot Camp is a free utility that allows your Mac to natively run Windows, by 'dual booting'. This means that when you turn on your computer, you choose either OS X or Windows. When running this way, your Mac *IS* a Windows computer. When you use this, the Boot Camp software may be free, but you still need to buy a copy of Windows.
Parallels is 'virtualization' software. It is an OS X application. It is an application that
pretends that it is a full PC. This means that your copy of Windows is running in a window on the Mac OS. With this, not only do you need to pay for Parallels, you also need to pay for a copy of Windows.
The advantage of Boot Camp is that because it is a fully native copy of Windows, you can run any Windows program just fine. Games, other 3d software all run at perfectly native speed.
The advantage of Parallels is that you are running Windows at the same time as OS X. This means that you can, for example, run your Windows-only application alongside all your OS X applications. The latest beta of Parallels also allows you to use your Boot Camp partition as your Parallels image. This means that you can use one single installation of Windows in both Parallels and Boot Camp. (Only one Windows license, you only have to install your apps once, you only have to give up a couple gigs of hard drive space once, etc.) But, because it doesn't have full access to the hardware, things like 3d acceleration don't work, and even though it passes USB devices on to the copy of Windows, not all USB devices work correctly, even if they do when in Boot Camp.
However, Parallels has said that their next beta will include 3d graphics support. I don't expect this to be 100% full speed, but it should at least allow 3d games and software to RUN when it wouldn't without 3d support.
So, if all you want to do is run some office software, and don't mind paying the $70 for Parallels (on top of a copy of Windows,) then go for Parallels. If you want to play 3d games, or use 3d modeling software, go with Boot Camp.
A third option, however, is Codeweavers'
CrossOver Mac. It is a piece of Windows
emulation software, not virtualization. This means that it runs Windows software without requiring a copy of Windows. But, since it's not a 100% "real" copy of Windows, not all applications work. For example, Microsoft Publisher does *NOT* work in CrossOver Mac. As such, make sure you go to their website and check their Compatibility Center. The bright point of this is that some 3d games run!