Here is an explanation of the difference:
AppleTV: Works more like using 'music sharing' in iTunes, as through Front Row. You use the AppleTV interface to browse the music that is on your (remote) computer, and choose what to play. It is TV and Apple Remote-based, so it is only really useful plugged into a TV.
AirTunes: Works from within iTunes on your computer. You select the AirPort Express base station the way you select speakers. Any changes in music are made from the host computer, regardless of where the speakers actually are. AirPort Express doesn't do video, so this is most useful on an audio system. Keyspan makes a
remote control that plugs into the USB port of the AirPort Express, and uses software on the remote computer so you can do limited control.
In my house, I use an AirPort Express hooked up to a shelf stereo system to listen to music in my bedroom, where there is no TV. The AppleTV would be completely useless here. (I usually just set a playlist of music I want to listen to going on the remote computer, and just turn off the stereo when I'm done listening.) Apple has confirmed that AppleTV does *NOT* have this AirTunes functionality. It only has the functionality listed above.
I am planning on getting an AppleTV for the living room, where I have a TV and receiver system. I used to use the AirPort Express/AirTunes here, but without a remote, and no visual menu, it wasn't the greatest system for a mostly video-oriented system. Of course, I don't have an HDTV yet (waiting for all the pesky standards to get settled, including CableCard and/or the software-only replacement for CableCard,) so the AppleTV will be pointless right now. (That's my only complaint, that it's HD-only. Especially since all iTunes Store video content is (marginally) less than DVD quality!)