What is the difference between EF and EF-S lenses?
EF-S lenses are specifically designed for APS-C digital bodies and optimized for the fact that they have smaller sensor and mirror. EF-S lenses are marked with a white square on the mount instead of a red dot that EF-glass has, and can be only used on EF-S compatible bodies (almost all of smaller-sensor Canon DSLRs, up to EOS 7D).
Film and larger-sensor digital cameras (5D, 1D, 1Ds) take only EF lenses. If you have a camera with EF-S mount support (such as EOS 7D, 50D or 500D), you can use both EF and EF-S lenses.
Do the EF-S lenses still suffer from the 1.6 crop factor i.e. making a 50mm become 80mm - or do you get the proper focal distance as specified on the lens?
@Vidar: You still need to apply the crop factor to get 35mm-equivalent field of view.