In today’s computing environment, something like 80% of businesses use the Microsoft Windows platform (or whatever variation) for their workstations. Many small businesses get confused when it comes to licensing Windows products. It wasn't terribly difficult with Windows XP because there were only two versions: Windows XP Home, and Professional. However, now with four versions of Windows Vista and three of Windows 7 (more if you count enterprise specific versions) it's gotten a little more complicated. But really, if you break it down, it's very simple.
For home use, it's really up to you. There are some features that lack in the Home editions of all three generations of the Windows OS. The largest two features that are missing with Home editions are remote desktop, and domain compatibility. Neither of those is commonly used in a home setting, so if you're just wanting something for basic internet browsing and gaming etc., you can save money with Home edition. If you want a multimedia experience as well, get Vista Ultimate or 7 Professional. The media center software that those editions include is rather nice for a multimedia PC application.
When it comes to business there's really only one option. The professional or business editions are the way you need to go for a few reasons. First off, any edition with Home in the title technically states in the Terms of Service that that edition is not to be used in a business setting. Will anyone verify this? No. However, especially if your organization is growing, you lose a lot of flexibility when growing your business if you have Windows Home editions in your organization. So resist the temptation to save 70 dollars if at all possible. You will likely regret it later. On the other hand, don't buy Ultimate unless you want to dual use the machine for business and multimedia. The benefits of Ultimate edition are extremely limited (which is actually reflected in the small price difference between Business and Ultimate).
The reason to use Business/Professional editions, are the features I mentioned above that Home editions lack. Remote desktop allows you to connect to your computer from a remote computer, giving you access to documents and resources for your business from anywhere. Domain support allows your computer to join a Windows “domain” which is a network management feature of Windows server. Even if you are not big enough to warrant a Windows server and a domain now, it’s well worth it to make sure you support it if it’s possible your business could grow to need such support. Once you move beyond five computers it starts to become a hassle to manage networked PC’s and you once you get to that size, the last thing you want to do is have to replace the Windows operating system or even the whole computer in some cases. Keep in mind, if you ever go to Best Buy to buy a computer, most, if not all of their available PC’s come with Home edition pre-installed. So that might not be the route to take when purchasing for your business.
I hope this gives you a little more clarity on what you should be looking for when you look to buy a computer for your home or business.