Answer
An ArcIMS Image Service creates a map image each time new information is requested; for example, when using 'zoom in'. In ArcMap individual layers can be turned on and off in an ArcIMS Image Service.
An ArcIMS Feature Service is a bundle of features that ArcIMS streams to a client, such as ArcMap, and allows more client-side processing than with an Image Service. With Feature Services, users can create unique value maps, customize map symbology, change scale dependencies, and turn on and off layers.