Crop Factor is something you will hear over and over, and it is definitely something you need to learn to understand you gear and what gear is right for you. Different cameras use different size sensors. The larger the sensor, the more expensive the camera is to make.
Here is an illustration from the Image Sensor Format page on Wikipedia.
When I talk about a Full Frame camera – like my Canon 5D Mark II, a Nikon D3 or D700 – the sensor is the same as a 35mm film frame. Or a 1:1 ratio.
A Canon 1D Mark III has a smaller sensor, with a ratio in size of 1:1.3. So the effective field of view of a lens on the 1D Mark III camera would be the focal length times 1.3. So if I have my 200mm lens on the 1D Mark III, the lens will give me a view of a 260mm lens on a Canon 5D Mark II body.
A Canon 7D has a smaller sensor than that, with a ratio in size of 1:1.6. So the effective field of view of a lens on the Canon 7D would be the focal length times 1.6. So if my 200mm lens on the 7D, would be the same view as a 320mm lens on the Canon 5D Mark II.
Now this can be a good and a bad thing. If you are trying to go wide, a 24mm lens on a 7D becomes a 38mm lens. You lose a lot on the wide end.
But, when you are shooting sports, you are often wanting more reach, and my 300mm 2.8L IS lens on my 7D gives me the reach of a 480mm lens on a full-frame body. The 7D is a great sports camera, especially for the price. The 300mm 2.8L IS lens can be had for around $3500 used, and a 500mm F/4 lens will let in half as much light, weigh a LOT more and cost about double the 300mm lens.
When you are shooting portraits, the full frame cameras like the 5D Mark II allow you to use a longer focal length at a closer range. So I can use my 135mm 2.0 lens standing in the same place with a 5D Mark II as I could a 85mm lens with a 7D. The longer focal length gives a shallower depth of field and allows you to isolate your subject more.
One other factor to keep in mind is noise. Noise is the grain you see in photos. If you have a 12 megapixel 1.6 crop body and a 12 megapixel full frame body, the pixels on the larger (full-frame) camera will be larger. The larger the pixels on the sensor, generally, the less noise the camera produces at high ISOs.
But for sports, the crop factor can really help. For portraits, landscapes and wide angle shots, you generally want the full-frame.