At it's simplest, llamas originally were domesticated wild animals whereas the alpaca is a cross between a vicuña and guernaca; ie developed to have the best properties of both. There is an obvious size differential and the alpaca's fur is much softer. That's the short version.
I have just "rescued" a video made in September of an interview with a Vermont alpaca breeder. He answers all those questions and more. It was too long and I didn't have time to edit it, so it has been sitting in a file.
Because there seem to be interest, I'll work on it shortly (after Feb. 1) and do a Hub with the entire video. Go to my Hub and hit subscribe so you'll be sure to be alerted when I put it up. Or maybe just "like" has the same effect. I don't know.
They are adorable, aren't they? If I didn't live in a "senior" apartment, I would sure consider having one! I'm not even allowed a mouse!