Difference between Iterative & Incremental Development
In iterative development the product is not released to the customer until all the planned iterations have been completed.
In incremental development a (sub)product is released to the customer after each iteration.
[Guide to advanced software testing By Anne Mette Jonassen Hass]
Most useful posts to further understand the difference between Iterative, Incremental Development
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History of Iterative and Incremental Development
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The waterfall trap for "agile" projects - Another interesting article which shows that Incremental is not iterative
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Iterative and Incremental redefined redux
Iterative and Incremental redefined
Also See:
Iterative/Incremental Methodology Questions
SDLC Methods & Methodologies