Boot Camp is Apple’s method of partitioning (splitting up) the hard drive so that a separate section of the drive is used to run Windows. Pros? Runs as fast as any other Windows computer with similar hardware. Cons? It requires a total reboot into Windows, and another total restart to get back to your Mac.
Parallels and Fusion instead create a little sandbox that runs in a window while the rest of your Mac is running. This little sandbox pretends that it’s a whole separate computer. Cons? Not as fast as Boot camp, especially if trying to play games. Pros? More than fast enough to run Quickbooks, etc., much easier to switch in and out of (including copying, pasting and file transfers), And you can easily back up your entire virtual windows machine with all your settings intact by copying a disk image.
Which is best? Well, Parallels, from the newer kids on the virtualization block, tends to have the niftiest features first. It tends to run a bit faster. Fusion tends to be slower and more staid. When it catches up features-wise it tends to be implemented smoother and more mac-like. Finally, it tends to be more stable and deal better with any updates that Apple throws around.
I have at least one client actively switching over to Fusion with every computer they buy a copy for or as they update past version 3, because of two issues. One – a time where an Apple update kept them from printing to USB printers out of Paralells for three days. Worse, the fact that two sets of automatic updates have been corrupted and required workarounds to download a valid updater. We discovered the updating issue when trying to get a fix for video display problems within Parallels. I can understand the USB issue – it was in part a matter of timing as Apple had released an almost simultaneous update. The video issue is less forgivable, but also understandable. The problems where two sets of updates failed at different times because the downloaded updater was corrupt is just embarrassing.