Xeons are used for servers and high-end workstations. They're intended to have much higher I/O and memory throughput, and handle 24x7 loads. A few lower-end Xeons in Socket 775 were only slightly more than rebranded Core2 Quads or Duals. For the increase in price they don't offer much value, but it might be good to buy one if you intend to run a 24x7 loaded system like a SMP folding rig.
Your Socket 771 Xeon will pretty much own a Core2 Quad at the same frequency and multiplier primarily because it's coupled with a server-class northbridge talking to registered FBDIMMs (these use a multiple channel serial interface which more resenbles PCIe lanes, while regular DIMMS are parallel, like PCI). Of course, since you're going to have TWO of these Xeons on a motherboard...
Another key difference is that many Xeons can take higher temperatures yet use less power. This is quite important when you've got a blade rack full of them and you're paying for electricity.
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