Just wanted to point out a really good post comparing the differences between Last.fm and Pandora (circa January 2006). In a nutshell, both services compile databases used to make decisions about which songs/artists are similar to one another and then use these decisions to create playlists automatically based on some seed (e.g. songs that are somehow like songs from the Beatles). Last.fm does this mainly by looking at who likes what (data cleverly extracted from things like iTunes via their "scrobbler" as well as through direct user preference statements) while Pandora utilizes manually (by them) annotated musical features of the songs themselves such as "subtle use of vocal harmony" and "mild use of rhythmic syncopation".
Of course, I'm curious what Pandora might be able to achieve by encouraging and enabling their users to annotate songs for them. Do you think you could correctly identify the mild use of rhythmic syncopation? I probably couldn't, but it would be cool if they showed me how.