Parallels and Fusion work in much the same way (running Windows in a "
Virtual Machine"). Boot Camp actually installs Windows directly on your Mac, giving you the option to boot into either OS. The difference is that with Fusion or Parallels, you can run both Windows and Mac OS at the same time. Although Parallels and Fusion both have limited 3D support, you can play a number of (mostly older) games. Anything requiring Direct 9.0 or higher won't run, including Vista's Aero interface. If you need to play games or want to have Vista's Aero interface, Boot Camp is your only choice.
As far as which one's better - that's pretty subjective. They're very, very similar. IMO, Parallels is a bit more mature at this point because it's been in production for quite some time. Fusion is a relative new-comer, but VMWare (the company that produces Fusion) is a pioneer in the VM industry. So, it's really hard to recommend one over the other.