Some info I found on the web which should help. Rest of article is on the link at the end.
Stabilization styles
Here’s a closer look at the stabilization options you’ll probably find at the camera counter.
Optical Stabilization
Used in compact cameras and SLRs, optical stabilization is the most common image-stabilization method. Different manufacturers have different names for it: Nikon calls its optical stabilization Optical Vibration Reduction when referring to cameras, and VR when referring to lenses. Canon calls its optical stabilizer the Image Stabilizer (IS); Panasonic, the Mega O.I.S.; and Sigma, the Optical Stabilizer (OS) system.
Optical stabilization uses gyroscopes within the camera or the camera’s lens to detect camera shake, and then steadies the path of the image as it makes its way to the camera’s sensor (CCD). Canon, one of the first companies to develop this technology, employs a floating lens element that moves in the opposite direction of the shake. For instance, if you suddenly move the camera upward while snapping your shot, the floating lens element moves the other way, thus stabilizing the image as it heads toward the sensor. In SLRs, the gyroscopes are often located in the lens; in point-and-shoots, they are positioned in the body (since there is no room in the lens on these tiny shooters).
Sensor Stabilization
This technology works similarly to optical stabilization: with sensor stabilization, gyroscopes located in the camera body detect shake and then move the image sensor to counteract the motion. Although it’s available on some point-and-shoots, sensor stabilization is more commonly used in SLRs. Olympus refers to this technology as Sensor-Shift Image Stabilization; Pentax, Shake Reduction; and Sony, Super SteadyShot.
Digital Stabilization
Unlike optical and sensor stabilization, which actually correct the image while you’re capturing a picture, digital stabilization attempts to make a picture clearer by changing the camera’s settings or by attempting to alter the image after it has been captured. There are several different approaches to digital stabilization. One of the most useful is Intelligent ISO. Used primarily in compact cameras, an Intelligent ISO feature automatically increases the ISO, or light-sensitivity, setting when the image sensor detects a moving object. As a result, the camera is able to use a faster shutter speed to snap a picture, thus freezing the motion of the subject and reducing blur. When the subject stops moving, the camera automatically returns to a lower ISO setting. This last part is important because higher ISO settings also tend to produce more image noise. Panasonic includes an Intelligent ISO control in many of its cameras, while Fuji employs a similar approach called Picture Stabilization.
http://www.macworld.com/article/58780/2007/07/augdigitalphoto.html?t=216
Paul.