window managers provide window decorations, mouse pointers and often a menu too.
Desktop environments tend to suck the soul out your pc.
just joking

Desktop environments tend to combine this with a file manager, and in the case of gnome and KDE try and provide configuration tools, they have a "desktop", that is a "board of icons", and in the case of windows ( - I don't know about KDE or gnome but I hope not) even act as a directory, letting you have files on the desktop. *shudders*. (actually I like it on windows, but only because windows lacks a decent home directory)