Folks who develop Web Services often get asked the question; when is it better to use one or the other. On a very high level serving data via a Web Service is for an application to consume while serving data via a report (ie. Microsoft Reporting Services) is for a person to consume.
Here is a cool page that some of us created to help people decipher between the two. Scott Bush put together the web page while others in Decision Support & Application Integration Services helped out with the content.