What's the difference between Photoshop and Illustrator?
Illustrator and Photoshop have been involved in an intense but loving relationship for many years now, and while they’ve learnt a lot of tricks from each other over the years, they’d be the first to admit the other’s strengths and weaknesses.
Photoshop is the younger of the two, and is preferred by the nit-picky pixel-perfect web design crowd—most web designers would be at a complete loss without it. It produces images which have a fixed size in its native PSD format which can be easily exported to a format such as JPEG, GIF or PNG. It prefers to see the world in very sensible colors: red, green and blue.
Illustrator is three years Photoshop’s senior and is a much more mellow character. It prefers to see the world in a rainbow of crazy colors: cyan, magenta, yellow and black. Illustrator is great when it comes to touchy-feely jobs: print, high resolution work, and work which requires clean lines and solid colors. Its images can be scaled to any size and are saved in AI format, which is easily exported to formats such as PDF, EPS and SVG.
Ultimately, the decision of what tool to use should be prescribed by the contest holder, but in general, Illustrator should be used for logos and print work, whereas Photoshop should be used to web design and any design which only be seen on a computer screen.