Generically, IP storage involves any storage functionality that is leveraging TCP/IP as a network transport -- using ubiquitous TCP/IP networks running on Ethernet or InfiniBand to perform storage functions, such as accessing storage. For example, you might use iSCSI or network attached storage (NAS) to access data or use Internet IFCP or FCIP to support storage over a long distance with Fiber Channel (FC).
However, some people refer to "IP storage" as being any type of storage access that involves TCP/IP, such as iSCSI, IFCP, FCIP, NAS or even content-addressed storage (CAS) object-based storage accessed over IP. Other people will refer to IP storage as some subset of that, such as iSCSI or NAS only. It really depends on your focus and the context that you're using. However, it's important to remember that IP vs. FC is an apples-to-oranges comparison. FC is an entirely different and incompatible interface.
FCIP or IFCP for storage over distance is very complementary to an FC-based or FICON-based storage network; ideal for business continuance or data replication. We also see a competitive aspect, positioning FC vs. IP. In practice, it's usually the IP community wanting a bite of the FC pie. Today, each technology is really finding its particular space, such as FC in the enterprise, iSCSI in the small and midsized business (SMB) area or distributed enterprise and NAS fitting between those.
Over time, we will see the reemergence of storage interface wars (e.g., iSCSI conquering the world or FC survival). This usually happens every few years -- often coinciding with some new interface or initiative or development. Right now, the contest between interfaces is still very much the status quo. Hype is certainly not reality. There's still plenty of life left in FC, iSCSI has a very bright future, and NAS is a diamond in the rough that really has a lot of upsides.
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