I think it's simply a terminology issue. Potato (P long O, tate, long O) Potato (P long O tot, short O long O). It all means the same as far as your system is concerned. I guess if one wanted to be technically correct though, my take would be:
Application = something all users on the system can have access to, use, abuse, and manipulate.
Utility = something privileged users/Super users should have access to for system maintenence, etc.