I tend to think of a food processor grating and chopping and a blender for liquefying.

From Wikipedia:

Food processors are similar to blenders in many ways. The primary difference is that food processors use interchangeable blades and disks (attachments) instead of a fixed blade. Also, their bowls are wider and shorter, a more appropriate shape for the solid or semi-solid foods usually worked in a food processor. Usually, little or no liquid is required in the operation of the food processor, unlike a blender, which requires some amount of liquid to move the particles around its blade.

. . .

Food processors normally have multiple functions, depending on the placement and type of attachment or blade. These functions normally consist of:

Slicing/chopping vegetables
Grinding items such as nuts, seeds (e.g. spices), meat, or dried fruit
Shredding or grating cheese or vegetables
Pureeing
Mixing and kneading doughs

Blenders are used both in home and commercial kitchens for various purposes, such as to:

Mix and crush ice in cocktails
Crush ice and other ingredients in non-alcoholic drinks such as Frappucinos and smoothies
Emulsify mixtures
Make smooth purées of semi-solid ingredients, such as cooked vegetables and meat
Reduce small solids such as spices and seeds to powder or nut butters
Blend mixtures of powders, granules, and/or liquids thoroughly
Help dissolve solids into liquids

why did I not think of looking at wikipedia? heh, dumbass. Thanks, amro. Looks like I do pretty much everything that I food processor does with a knife and a mortar/pestle. Albeit more slowly, no doubt.

Both machines can really come in handy. I made potato kugel (which requires many, many grated potatoes) recently and it would have taken FOREVER to do it manually.

amro got it: food processor work better with dry ingredients, blenders better with wet, though there is some over-lap.

Or you could watch this 20 minute home-made infomercial-type video. You can buy hybrid devices (another unpolished infomercial type thing), but the only saving is in the use of the same base/motor mechanism.

Exception that proves the rule:

Pesto in a food processor: TEH AWSUM!
Pesto in a blender: TEH SUCKAGE!

flt touches on an important point: though a food processor looks like it has a much larger capacity than a blender (for, say, pureeing a whole pot of soup at once), you can't actually fill it with liquid. There will be a mark on the side that indicated the liquid fill line; above that, soup will fling itself out. BLARK, what a mess!

Me, I use my food processor pretty much only for making hummus and making paté. Once in a while, I use it for chopping, but really only when I'm making catering-sized quantities of stuff, or a dish (like amro mentions) that takes a huge amount of grating or uniform slicing. If I were making scalloped potatoes for our enormous family Thanksgiving, I'd haul out the fp just to get the slices uniform.

If you're in the market for something other than a blender, you might consider an immersion blender with a mini-processor attachment. I use mine ALL THE TIME; it's earned a spot on our tiny countertop.

One day I discovered that the immersion blade attachment fits right into the mouth of the glass jars I keep around. (In our case, they're salsa jars and peanut butter jars, scrubbed clean and labels stripped.) That means I can make [salad dressing/smoothies/pesto/sauces] right in a jar.

I don't have a food processor. I do have an immersion blender, which I don't use terribly often -- I only occasionally make mayonnaise, smoothies, blended soups. I also have a mandoline (which I use with a Kevlar glove so my fingers stay attached) if I need lots of uniform slices, such as for cole slaw.

I should also mention my enormous rough granite mortar and pestle, which I've seen described as a "Stone Age food processor." It's astonishing. It can grind a lemon, rind and all, into paste in about a minute. It's perfect for pesto and hummus in small-to-medium quantities.

I got a Ninja Pro Handheld Blender and Food Processor from a Woot and I am in love with it. It is really as good as it seems in the video.

I've been wanting a blender with a really good ice crusher for awhile myself, for frozen margaritas and toasted almonds (yum).

I'd also really like one of those pasta makers where you feed the dough through again and again, making it thinner and thinner each time. There's nothing like fresh pasta.

A mini food processor was one of the things I took from my mom's house when everything was being cleaned out. I hate chopping onions, so it'll come in handy. Plus Jon wants deviled eggs.

(I may not manage any time to cook until the summer.)

I have the Ninja Master Prep Pro and it's awesome. It was £30 on eBay as an unused QVC return. I also have an ancient Thunderstick which I bought probably 15 years ago. It's exactly the same as the Bamix (I've examined the Bamix in detail and there is no difference and Bamix blades fit it) but was about £20 compared with stupid money for the Bamix.