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Three Debian branches are v3.0 stable (a.k.a. Woody), v3.1 testing (a.k.a. Sarge), and unstable (a.k.a. SID). There is also an experimental branch, but it is more for devs and those who live on the edge.
Woody would be considered ultra stable and appropriate for servers and mission-critical workstations. It is now dated.
Sarge is more up-to-date and may contain some RC bugs. It is quite stable though, especially with its immanent release as stable, and suitable for most desktop and backroom servers. Also, Sarge's installer is much more advanced and functional than its predecessor. Right now, Sarge would be my choice for both desktop and server duty. For my workstation, I will probably follow Etch (the next testing branch) when it is released.
SID will never be officially released because it is where all the new and latest packages are introduced. Many people run this branch on their desktops with great success. However, one should have some some savvy with dpkg and be aware of buggy packages before updating. I wouldn't recommend this branch to a newbie.
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