Talkswitch 248vs VoIP Phone System w/ 5 IP phones and Free VoIP

IP (Internet Protocol)
A protocol that specifies the way data is broken into packets and the way those packets are addressed for transmission. Unlike traditional telephone lines which create a straight path from caller to recipient; IP uses the best available path at any given moment to move data packets between point A & point B. The beauty of IP is that the sending end and receiving end communicate success in sending and receiving to insure all data packets are delivered. A really great concept of IP is that of self healing. If a route is broken and the data packets cannot be delivered an alternate route is automatically selected.

VoIP (Voice over Internet Protocol)
This is simply the carrying of voice via IP meaning a standard voice stream is broken into packets at the transmit end, sent over a standard data network (such as the Internet) and reassembled into a voice stream at the receiving end. VoIP traffic is trickier than normal data traffic because the timing of packets on the receiving end is critical. For more detail see Basics of the Internet.