A SAN is a special network, purely used for the storage. A dedicated interface is used on the server to access this network. It is high speed, often 2 to 8 gig fibre channel or gigabit ethernet, but with large frames up to 4500bytes (1500 is the limit on normal ethernet).
A NAS is attached to the normal LAN, like any other PC, printer, router or switch. It uses network drive mapping to allow access, and is shared by any allowed devices on the local or remote networks (Intranet). It uses standard ethernet frames, so is generally slower than a dedicated SAN.
SAN is expensive compared to NAS, but offers higher speed of transfer. It is generally aimed at medium to large business applications. NAS is cheap, and provides an easy shared file server resource for a LAN environment, from SOHO/small office to medium sized business departments.
SAN, (Storage Area Network), is commonly used to refer to a specialized network, fibre channel, to carry SCSI protocol, block level data between devices, usually over a fiber network. iSCSI is a form of SAN which inserts FCP, (fiber channel protocol), frames within an IP packet, and transmits it over common network infrastructure.
NAS, (Network Attached Storage), is commonly used to refer to file level data being sent over common network infrastructure between devices. NAS is usually a specialized appliance which will communicate multiple file level protocols over TCP/IP network, such as FTP, NFS, CIFS, HTTP, etc. They also allow file sharing between platforms, such as Unix and Windows.