Hard phones are physical pieces of hardware that plug into your network typically through an Ethernet connection. They are the best type to use as they have no dependency on a computer. This means that they will work whether your computer is turned off or does not exist at all. Also, it is very nice to use a regular handset style phone instead of a microphone and computer speakers. One potential disadvantage is that your home network needs to have an unused Ethernet port in which to plug the phone in.

Soft phones are simply a piece of software that is loaded onto your computer and uses the computer's soundcard as a user interface. Most people start with a soft phone because of their low price (typically free) and availability (easily downloadable). The down side is that you do need a computer and it is often more difficult to use a microphone/headset than a traditional handset.