The most common distinction between art and design is in design's more commercial viability, but this essay introduces another distinction based on what the end products of each discipline is supposed to do for the audience:
The audiences for art and design expect different things. The audience for art wants to look at the artwork or listen to the composition--perhaps to contemplate and reflect, perhaps to be transported by the power of the aesthetic experience or the scene portrayed--whereas a design's audience wants to use the information to find their subway station or select a product.
Design may indeed arrest the attention and engage the emotions of a viewer, but at some point, as Beatrice Warde said, the goblet of design must become transparent, allowing viewers to gather the intended information, rather than to be absorbed by the designer's layout.
Art draws attention to itself deliberately. Its very form is the means to intensify our perception. If a visitor to the Sistine Chapel marvels at the economy of the scene of God separating the light from the dark, she is responding to the Michelangelo's conception, his artistic free creation. But if she is moved by the Last Judgment because of the profound theological truth it expresses, she is responding to the Pope's purpose. That is, she treats it as information design, as an illustration of doctrine. [emphasis mine]
To put it another way, art is like the actors and setpieces on stage in a theater, while design would be more like the folks doing all the backstage and technical work like lighting and sound. You're supposed to pay more attention to the actors than to the stuff that's backstage. Likewise, art is meant to attract attention to itself, while design should be seamless and invisible (like a ninja!).
The distinction between art and design seems rather clear, but it's also obviously not, since I just admitted in the first paragraph that I constantly abuse my fine arts sensibilities in a lot of the design projects that I do. There's a lot of interplay between the two disciplines -- if you're good at one of them, you can carry over some of those skills into the other. But a good artist is not automatically going to be a good designer, and vice versa. So one of the things I'm interested in exploring with my capstone project this quarter is seeing if I can produce something that looks equally illustrative/artistic and designer-ish.
In short, I'm going to cross the streams.
(By the way, this is Stephanie, since it's probably not immediately obvious from this name. Or maybe it is, since looking over the list of contributors on the sidebar, this is the only "who the eff?"-inducing name on the list.)