Emphasis on Research vs. Practice
The PsyD (Doctor of Psychology) degree arose in the early 1970s, to create a professional degree, much like that for a lawyer, that trains graduates for applied work -- therapy. The rationale was that the PhD is a research degree, yet many students seek a doctoral degree in psychology to practice and do not plan to conduct research. The PsyD is intended to prepare graduates for careers as practicing psychologists. The PsyD offers a great deal of training in therapeutic techniques and many supervised experiences; however, there is less of an emphasis on research than in PhD programs. As a graduate from a PsyD program you can expect to excel in practice-related knowledge and experience, and be familiar with research methodology, comfortable reading research articles and learning about research findings, and able to apply research findings to your applied work. PsyD graduates are trained to be consumers of research-based knowledge.
PhD programs are designed to create psychologists who can not only understand and apply research, but conduct it. PhD graduates are trained to be creators of research-based knowledge. PhD programs range in the emphasis they place on research and practice. Some programs emphasis creating scientists. In these programs students spend most of their time on research and much less on practice-related activities. In fact, these programs discourage students from engaging in practice. While PsyD programs emphasize creating practitioners, many PhD programs combine both the scientist and practitioner models -- they create scientist-practitioners, graduates who are competent researchers as well as practitioners. If you're considering a degree in psychology, keep in mind these distinctions so that you apply to programs that are appropriate to your interest sand goals. Ultimately, if you think you might want to engage in research or teach at a college at some point in your career, you should consider a PhD over a PsyD because the research training provides more flexibility in career options.
Generally speaking, PhD programs offer more funding than do PsyD programs. Most students who obtain a PsyD pay for their degrees with loans. PhD programs, on the other hand, often have faculty with research grants who can afford to hire students to work with them - and offer some combination of tuition and a stipend. Not all PhD students are awarded funding, but you are more likely to get funding in a PhD program.
Time to Degree
Generally speaking, PsyD students finish their graduate programs in less time than do PhD students. A PsyD requires a specific number of years of coursework and practice, as well as a dissertation that usually requires that students apply research to a given problem or analyze the research literature. A PhD also requires a specific number of years of coursework and practice, but the dissertation is a more cumbersome project as it requires that students devise, conduct, write up, and defend an research study that will make an original contribution to the literature. That may take an extra year or two -- or more -- than a PsyD.
Bottom line: Both the PsyD and PhD are doctoral degrees in psychology. Which you choose depends on your career goals, whether you wish a career solely in practice, or one in research or some combination of research and practice.