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Hi,
One is a combination of Contact and Account the other one is just Account.
One is orientied towards doing business with persons while the other is with companies.
To use PersonAccount you have to ask SF to enable it for your org and you cannot revert it back.
Person account is differentiated with Business accounts by their record type (you have to create a record type for Person Accounts).
There is some more information about this in the docs.
Regards,
Kos
Also you may want to check this great article: http://blog.jeffdouglas.com/2010/06/22/working-with-person-accounts-in-salesforce-com/