What exactly is the difference between EF and EF-S lenses? They look the same to me. The mount doesn't appear to be physically different...
It was already mentioned that EF lenses have a wider image zone than the EF-S ones. It was also mentioned that EF-S lenses protrude a bit further into the camera.
I would like to contribute the following:
Wide-angle lens have to collect light from a very wide angle and then produce an image on a sensor or film of a fixed size. With a mirror moving back and forth you have to leave some space before the film/sensor for it. This is typically very hard to do and requires lots of expensive elements to collect light from so large an angle, bend it in all sorts of ways and then make it produce an image of certain size, distance and quality into the camera.
If you get closer to the film/sensor, however, you can shorten the focus distance of your lens, which means you don't need to bend light so much anymore to produce an image on your film/sensor. This translates into fewer and cheaper elements for your wide-angle lens, which translates into lower production costs for a good-quality lens, which finally directly translates into more $$$ in your pocket and happier parents/spouse.
On film cameras there is so much you can do: you can't ask the world to change the film they use, and if you did, quality would suffer. Your film is 35mm, therefore your mirror has to be approximately 35mm as well. Well 35mm is 35mm and requires so much space to swing and that's that. With a digital cameras things are different: your CCD is as big or as small as you can make it (and still have customers buying your cameras). So, Canon, seeing that a 35mm CCD is currently so incredibly expensive to make (I assume because of all the noise it picks up and the purity of the silicon required), decided to do something about it and have two problems solve each other.
Telephoto lens are fine with EF: the larger the distance to produce image, the better as they tend to bend light THE OTHER WAY. Having them as EF-S is silly. Instead all Canon has to do is make sure EF-S and EF mounts compatible (read physically and electrically the same) and your telephoto lens would work just fine without being specially crafted for EF-S. However wide-angle lens, which benefit from cropped-sensor cameras, are cheaper as EF-S than they would be if they were EF. The same goes for the cameras that use them.
The bottom line is that EF-S is basically a way to cut production costs for both your lens and your camera, with the tradeoff that your not-so-expensive-lens-anymore will only work on your not-so-expensive-camera-anymore (or your camera's mirror will crash into the lens as it swings and your expensive camera would be ruined).
That's my take on things. Correct me if I am wrong. I hope it helps.