Basically, the iPod is an mp4 player. Almost like a cell phone (unless it's the iPhone), it is designed to be an on-the-go wenue for all of your music and videos.
On the other hand, the iPad is a tablet - a whole different type of electronic. Tablets are just like netbooks - basically, laptops, but more portable and practical. The iPad is more like a big touch-screen netbook or laptop that you can take around. Better internet, larger computing capabilities, and (we're not fully sure yet on it's full specs) can maybe take compact disks, and transfer large files, etc.
So the iPod is an entertainment device - for listening, watching, having fun, and the iPad is a tablet that can be used for many things from business to reading newspapers in full.