The Core2Duo is a 64 bit chip. However, it can run in 32 bit mode, just like the 64 bit G5 chip can. Right now, Mac OS X Tiger 10.4.x is 32 bit software and so the Core2Duo runs in 32 bit mode. When Leopard comes out, which is reputed to support 64 bit, the Core2Duo should run in 64 bit mode.
So, in a sense the Core2Duo can be both, depending on the software it is running.
Anyone here old enough to remember the days of Windows 3.1, when the 32 bit extensions for Windows 95 started showing up early, and suddenly (gasp!) your Pentium would step up to 32 bits and run like a hot knife through butter (...well it seemed like that at the time anyway). I remember that my WFWG system suddenly seemed twice as fast when I installed the 32 bit file system and the other 32 bit extensions. It sure seemed fast at the time.
It is a similar idea to the Core2Duo. The early Pentiums were already 32 bit chips, but capable of running in 16 bit mode if presented with 16 bit software (Windows, DOS). But when presented with 32 bit software, they flipped to 32 bit mode and ran like crazy.
I understand that we wont see nearly the performance boost going from 32 to 64 that we saw going from 16 to 32, simply because CPU chips have been so optimized these days that it just doesn't make that much difference. I have read some articles that say that the G5 chips may even run a little slower when running in 64 bit mode! Sheesh!