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Generic and Desktop are terms to describe what was compiled into the kernel. Generic probably has everything compiled in to run 99% of the hardware out there. Desktop is compiled to work on a desktop use type system, ie e-mail, web browsing etc. not as a server for example.
On any given system you would find a generic kernel will have lots of stuff compiled in the system will never use. If you want speed, and maximum performance, you re-compile your kernel, and only load the stuff your hardware needs. This requires detailed knowledge of your systems hardware.
Ubuntu as a distro was never intended for this type of user. It is intended for the new(er) linux user, wanting things to work out of the box, and the user that does not want to tinker with the inner workings of the system.
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