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Is there a difference between a Jailbreak (say from a PS3Key or iPhone) and Custom Firmware (like Kmeaw and GeoHot's)? If there is, what is it?

there both the same its just that cfw is a permant jailbreak no need for power and eject and jailbreak only works on 3.41

There actually is differences, like in how they used lv1/2 patching and if they added peek poke, and stuff like that. I orefere cfw because it's cheap, (free) but I like USB jailbreak because it has a little more functionality. Although for an end user who just wants to have fun, use cfw.