Is one better than the other?
Look at what can be done with Illustrator: Flickr Vector Group
How are vector graphics (Illustrator) different than bitmap graphics (Photoshop)?
More differences video.
Vocabulary you need to know:
- bitmap (raster)
- vector
- pixel
- anchors (in Illustrator)
- stroke (in Illustrator)
- fill (in Illustrator)
File types you need to know about:
- jpg or jpeg
- PNG
- GIF
- .ai
- .psd
- TIFF