There are two versions of every Windows Server 2008 operating system: the Core and Full editions.
Wikipedia has a reasonable article that explains Server Core:
Windows Server 2008 includes a
variation of installation called a
Server Core. Server Core is a
significantly scaled-back installation
where no Windows Explorer shell is
installed. All configuration and
maintenance is done entirely through
command line interface windows, or by
connecting to the machine remotely
using Microsoft Management Console.
However, Notepad and some control
panel applets, such as Regional
Settings, are available.
The main purpose for Server Core is to limit security risk on servers by limiting what can be installed and executed. Fundamentally they are the same, with the same hardware requirements and limitations, just a different target usage - most organisations will actually want the Full edition most of the time.