There are already a lot of good answers on what the differences are, so let me give a slightly different perspective and add the why.
As was already explained, the main difference is type erasure, i.e. the fact that the Java compiler erases the generic types and they don't end up in the generated bytecode. However, the question is: why would anyone do that? It doesn't make sense! Or does it?
Well, what's the alternative? If you don't implement generics in the language, where do you implement them? And the answer is: in the Virtual Machine. Which breaks backwards compatibility.
Type erasure, on the other hand, allows you to mix generic clients with non-generic libraries. In other words: code that was compiled on Java 5 can still be deployed to Java 1.4.
Microsoft, however, decided to break backwards compatibility for generics. That's why .NET Generics are "better" than Java Generics.
Of course, Sun aren't idiots or cowards. The reason why they "chickened out", was that Java was significantly older and more widespread than .NET when they introduced generics. (They were introduced roughly at the same time in both worlds.) Breaking backwards compatibility would have been a huge pain.
Put yet another way: in Java, Generics are a part of the Language (which means they apply only to Java, not to other languages), in .NET they are part of the Virtual Machine (which means they apply to all languages, not just C# and Visual Basic.NET).
Compare this with .NET features like LINQ, lambda expressions, local variable type inference, anonymous types and expression trees: these are all language features. That's why there are subtle differences between VB.NET and C#: if those features were part of the VM, they would be the same in all languages. But the CLR hasn't changed: it's still the same in .NET 3.5 SP1 as it was in .NET 2.0. You can compile a C# program that uses LINQ with the .NET 3.5 compiler and still run it on .NET 2.0, provided that you don't use any .NET 3.5 libraries. That would not work with generics and .NET 1.1, but it would work with Java and Java 1.4.
