I assume the difference in name is due to their cooking processes, but am unsure what exactly makes them different.
according to the Ball canning book (paraphrasing)...
JAM is made by cooking crushed or chopped fruits with sugar, and is made of one fruit or a combination of fruits, is spreadable, and is firm but will not hold the shape of the jar.
JELLY is made from juice strained from fruit, usually prepared in a way to keep it crystal clear, and is gelatinized enough to hold is shape when removed from the jar, yet is still spreadable.
PRESERVES are fruit preserved with sugar so it retains its shape, is transparent, shiny, tender and plump. the syrup generally has the consistency of honey, and a true preserve will not hold its shape when spooned from the jar.
to add to the confusion, i'll also add their descriptions of...
CONSERVES, which are jam-like and made of a combination of one or more fruits, nuts and raisins, cooked until it rounds up on the spoon.
MARMALADES are a soft jelly containing pieces of fruit and peel evenly suspended in a transparent jelly. similar in structure to jam.
An additional note: The cooking process is pretty much the same for jam, jelly, marmalade, preserves & conserves. It is the preparation of the fruit which makes the difference in the final product.
Jelly is mostly made up of gelatin, pectin, or some other gelling agent that is added to fruit that has been cooked until it is soft and its solids have been strained out, often to transparency.
Jam is cooked like jelly, but the fruit solids are pureed or mashed and kept in the mixture.
Preserves similarly contain cooked fruits, except that the fruit solids are left in chunks rather than pureed.
From a practical perspective jelly shouldn't have seeds while jam might. I object to the texture of raspberry jam and prefer jelly, but the the seeds in strawberry jam don't bother me.
WiseGeek has an excellent article about it that also addresses nutritional value and common uses.