Background -- physical cabling

10base2

• Often called 'co-ax' or 'thin ethernet'
• Uses BNC connectors.
• Uses a single cable run, looped right to the back of each machine. Machines connected via 'T' pieces.
• The cabling must be terminated at each end.
• Does not require any other hardware
• Difficult to locate any cabling faults.

10baseT

• Also known as 'twisted pair'
• Uses RJ45 'telephone style' connectors
• In most configurations, uses a star arrangement, with all machines connected via single cables to a central hub.
• Requires the use of a central hub.
• Cabling/card faults can be easily diagnosed by looking at the hub display

Which cabling method you choose is fairly arbitrary, but I'd always suggest that new users go with 10baseT, and a minihub (ranging from around £25) as the physical setup is generally easier, more flexible and easier to fault-find. You can actually use 10baseT cabling without a hub, if you just want two machines connected, but that setup has it's own set of gotcha's and I refer the reader to the aforementioned FAQ for further details.