Therefore what is the difference between events and albums?
Events are organisation for those who can't really be bothered. They are automatic - based entirely on Date and Time the camera records the photos as taken.
You can move photos between Events, you can Merge Events, you can Rename them and sort them in various ways except one: You cannot manually sort in an Event as Events are all automated.
Albums are infinitely flexible. You can create Albums based in whatever criteria you like - An album of people in blue hats - and these can be drawn from any Event you choose and you can order them within the Album in any way you want. As I said above, as Albums are virtual, a photo can be in 50 albums and use no extra disk space. You need a duplicate file to have a photo in two Events.
With iPhoto you have many extra organising tools apart from Date. Here's a canned answer I often use for questions about organising. It might spark somethings for you
I use Events simply as big buckets of Photos: Spring 08, July - Nov 06 are typical Events in my Library. I use keywords and Smart Albums exensively. I title the pics broadly.
I keyword on a
Where basis (The When is in the photos's Exif metadata). I also rate the pics on a 1 - 5 star basis.
Using this system I can find pretty much find any pic in my 25k library in a couple of seconds.
So, for example, I have a batch of pics titled 'Seattle 08' and a typical keywording might include: John, Anne, Landscape, mountain, trees, snow. With a rating included it's so very easy to find the best pics we took at Mount Rainier.
File -> New Smart Album
set it to 'All"
title contains Seattle
keyword is mountain
keyword is snow
rating is 5 stars
Or, want a chronological album of John from birth to today?
New Smart Album
Keyword is John
Set the View options to Sort By Date Ascending
Want only the best pics?
add Rating is greater than 4 stars
The best thing about this system is that it's dynamic. If I add 50 more pics of John to the Library tomorrow, as I keyword and rate them they are added to the Smart Album.
Keywording takes time to set up, there's no doubt about it. I use Keyword Manager as it's much more powerful than the inbuilt system, and adds the possibility of nested keywords. So, for instance, if I add John to a photo it also adds 'Family'. Now I can add many keywords to a pic quickly.
In the end, organisation is about finding the pics. The point is to make locating that pic or batch of pics findable fast. This system works for me.