There's a lot of confusion between the two. Despite the lump term of this being the "eBook revolution," Apps and eBooks are not the same thing.
While eBooks can mean anything from a .pdf to other formats (click here for a comparison of eBook formats on Wikipedia), they often use what is called ePub format. Text flows within a 'frame.' Controls allow the reader to change the font, increase or decrease font size, etc. within that frame. A vignette image, video or sound bite can be embedded in the flowing text, but images cannot run off edge (bleed*) or be locked into a certain layout (because of the ability to resize text). Full illustrations as double page spreads cannot be supported, although single page images can (within the frame) as a single image or screen shot, which is the current move towards placing picture books into the ePub format. However, currently, those page shots are in black and white (on the Kindle, although not always on the iPad). The text is not adjustable. Pages are small and hard to read. So, as of this writing, ePub doesn't truly support picture books.
Apps are a completely different animal. Apps are like mini-programs, which basically means, the sky is the limit. That's where all the interactivity can come in, with touch screen controls, sound, full bleed images, etc. Picture book apps have been called eBooks, interactive storybook apps, story apps, or children's book apps. But whatever the term used, they're awesome.
So why aren't all books apps? Because currently, most eReaders run primarily via ePub. And it makes sense when you compare the size of what is basically a text document to the size of an interactive app. The iPhone/iTouch/iPad put apps on the map. However, even within apple, the iBookstore only represents eBooks - not apps (which is another can of worms I'll talk about later).
That may not seem fair, but technology is changing rapidly and the two technologies are slowly meeting in the middle. They're not there yet, but give it a little time. And I do mean a 'little' - the eBook revolution is moving fast!
Need an example? My picture book, Lula's Brew, is an app available on the iPhone/iTouch/iPad (check the version), but it is not an eBook.
*Note: As of December 15th, iBooks 1.2 now allows full bleed, double page spread images with zoom - a true picture book experience online. Not many exist yet, and it's not on the Kindle, but if you search for "Tron: the Movie Storybook" in iPad's iBooks, you can download a free sample. Wow. This changes everything.