GSM and CDMA are the two main digital technologies that cell phone carriers in the United States use to transmit calls.
Of the major operators, T-Mobile and Cingular use GSM, while Sprint and Verizon Wireless use CDMA. Nextel uses another technology called iDEN, but it will be phased out around 2010 due to Nextel's recent merger with Sprint. Since GSM and CDMA transmit calls using different methods, they are incompatible, so a phone used on one network cannot be used on another. And while there are some complex variations, on a more surface level, each technology offers distinct advantages to consumers.
GSM is the dominant cell phone technology globally. GSM is the standard in Europe, but it's also present in North and South America, Africa, Asia, Oceania, and the Caribbean. So GSM is a much better choice for global travelers who want to take their phone when they go abroad. GSM phones also use SIM cards, which make it much easier to switch your phone number and contacts list between two handsets.
CDMA is used in fewer regions around the world, but it has a very strong footprint in the United States. In fact, its national coverage area here is larger than GSM when you take into account analog networks. Though they won't be around forever, analog networks provide better coverage in rural areas. Also, CDMA carriers have been quicker about rolling out 3G networks. Though the GSM players will catch up eventually, they lag behind as of now.