Windows Presentation Foundation is a vector-based system that is part of .NET 3.0. It allows you to define your UI in XAML, and can do all sorts of animation, 3D, etc. very easily. It's much newer and still being evalulated by a lot of folks.
Windows Forms is a wrapper over older windows UI classes (Win32/MFC or whatever). It came with .NET 1.0 and uses C# to define all the UI and its layout. It's the tried and true UI method.
