To sum up the difference:
"O" has a larger profile, meaning the track is taller. 'O' is the same height as lionel's fasttrack and there are transition pieces available to switch between these.
O27 is shorter and made of a thinner metal. It's not any worse, really for running your trains, but the 'standard' 27 inch diameter curves are too tight for any sort of scale engines or rolling stock. There are wider curves available in the O27 profile such as o-42 and o-54. The height of O27 profile is the same as most other, more scale looking track I believe, such as Atlas, gargraves and ross.
Aside from Fasttrack, all the brands of track I'm aware of use the O27 profile.
When it comes to the actual curve diameter, 'O' track has a 31 inch circle as the smallest diameter with 42,54, and 72 inch curves as well. Which profile you choose is up to you and really has more to do with what track brand you plan to use.
As for the trains themselves, the O27 were the lower cost products. generally less quality and less detail. Also worth noting that many of the starter set locos now seem to have trouble with the tight o27 curves as the seem to be designed for the o36 curves that are standard for fasttrack.
