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Adobe Illustrator vs Photoshop

What is the difference between Photoshop and Illustrator? In a nutshell:

A lot of people are confused about the differences, and many people mistakenly assume these two programs are different versions of the same application. While it is true that they each share many features and similarities, they are designed for quite different purposes.

Illustrator is used for creating original graphics and illustrations. Artists use tools to draw lines, curves and shapes. Importantly, these tools are vector-based, meaning the information is stored as descriptions of shapes rather than individual pixels. Vector objects can be resized and manipulated without losing quality. They have various other advantages as well.

On the other hand, Photoshop is designed to work with bitmap images, i.e. files in which image information is stored as individual pixels. This is ideal for photographs and certain other types of image. Note that bitmap images cannot be resized without some sort of quality compromise.

Note: Photoshop CS3 does include some vector tools, but vector object become bitmaps once the file is "finished" (rasterized or saved).

FAQ

Q: Which is better: Photoshop or Illustrator?
A: Neither. They are both better for their respective applications.

Q: I can't afford Photoshop. Should I buy Illustrator instead?
A: No, buy Photoshop Elements instead.