A definition of a cloud's and the related operating systems that I have seen published from VMware is as follows :

"Cloud Operating System
A cloud operating system is a new category of software that is specifically designed to holistically manage large collections of infrastructure – CPUs, storage, networking – as a seamless, flexible and dynamic operating environment.  Analogous to the operating system that manages the complexity of an individual machine, the cloud operating system manages the complexity of a datacenter.  Although alternative approaches may be pursued, VMware believes that virtualization is the key underpinning technology to enable the cloud.

Internal Cloud
An internal cloud is a cloud infrastructure provided within the internal IT environment, which brings the benefits of cloud computing to internal IT service providers.  Gartner refers to an internal cloud as a private cloud. 

External Cloud
An external cloud is a cloud infrastructure that is owned and managed by an external IT service provider, such as a hosting or software-as-a-service (SAAS) provider.  This is often referred to as a public cloud infrastructure as well. 
Virtual Private Cloud
A virtual private cloud is a cloud computing environment that spans internal and external cloud infrastructure, presenting a seamless, managed cloud to the business.  "

Wikipedia quotes cloud computing as :

"Cloud computing is a style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet"

The over the internet term is a bit ambiguous and incorrect in my humble opinion.
I prefer something like this :

"Cloud Computing is about dynamic scalable resources, provisioned on demand to meet the needs of an end user"

The best site I have seen for demystifying the FUD and actually educating people on what a cloud is http://www.rackspace.co.uk where the image below has been taken from.

General Availability for VMware vSphere will be the 21st of May 2009.

Up until that time, any purchased of VMware Enterprise products will be directed at the current Virtual Infrastructure Suite known as VI3. This includes VMware ESX Server and VMware VirtualCenter Server.

At the 21st of May 2009, you will not be able to purchase any more software licenses for Virtual Infrastructure 3. All customers with current subscription will automatically be entitled to a vSphere license enabling an upgrade.

When talking about licensing, it can be quite confusing. There are three components to a VMware license and for clarity these have been identified in this article as.

The "software licenses" product that is sold which is subject to the GA date.

The "activation code" is based on the license sold and affected by the GA date.

What does this mean for you ?

If you are an existing VI3 customer and have current SnS, then you have to do nothing and can upgrade when you want.
If you are an existing VI3 customer and want to purchase new licensing after May 21st, then you will get a vSphere software license and it will place you in a position where you either need to upgrade or generate a downgraded license key through the portal to VI3.

If you are not an existing VI3 customer and purchase before May 21st then you get VI3 software license with the upgrade software license after May 21st due to your SnS subscription.
If you are not an existing VI3 customer and purchase after May 21st then you will be purchasing a vSphere software license but can generate an VI3 license key.

If you are an existing customer and have let you SnS lapse, then get it fixed!