A. APP-V and MED-V address two very different scenarios. APP-V virtualizes at the application level, placing applications in a sandbox-type environment. Applications can't see one another through the user of virtual file systems, virtual registries, or virtual services but the applications are still running on the local client OS. APP-V is great for resolving conflicts between applications and expediting application testing deployment, as APP-V applications aren't locally installed on a computer.
MED-V, set to be available in the first half of 2009, virtualizes at the OS level and is used to resolve incompatibility problems between applications and an OS. MED-V is also a solution for the delivery and maintenance for virtual machine (VM) images on a client desktop. For more information about MED-V, see this previous FAQ.
If your problem is that applications are incompatible with one another or you need to deploy apps quickly with minimal testing, you want APP-V. If you have applications that won't run on a new client OS or you want to manage VM images then you want MED-V. Either way, you need the Microsoft Desktop Optimization Pack to get access to the technologies. It's highly likely you may need to use both technologies for different applications within your organization.
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Check out hundreds more useful Q&As like this in John Savill's FAQ for Windows. Also, watch instructional videos made by John at ITTV.net.