Please check out this page about Debian - Debian releases
3.04 of Woody is the latest Woody release, but Woody is the oldest (and most stable) branch of the Debian tree. Woody frequently is used on servers where you want/need as little to change in its lifetime as possible. The plus side to that is that it is super stable (because the vast majority of the software versions on Woody have been out for a very ling time), and the downside is it has none of the latest and greatest software, as it has to age with few/no errors for the Debian team to include it on the stable branch, named Woody.
The 3 current releases (all on version 3.04) are Woody (aka Stable), Sarge (aka Testing), and Sid (aka unstable). Sid has all the latest versions of everything, and consequently tends to have problems and breaks. If you love the bleeding edge and are comfortable finding, reporting, and fixing bugs, Sid is for you.
Sarge is a nice medium between the extremes of Woody and Sid. I would think most desktop Debian users go with Sarge. It has slightly older versions of apps, old enough that the bugs have been found and corrected/removed. It isn't as concerned with stability as Woody, but isn't as bleeding edge as Sid.