Bill Ives provides a good summary of Tim O'Reilly's article, What is the Web 2.0?. After reading both, here is my more succinct, albeit cynical summary:

Web 2.0:
Users provide the data (which is then owned by the company).
Users provide the metadata (which is then owned by the company).
Users design the application (which is then owned by the company).
Users pay the company continually for the right to use the application they designed to access and manipulate the data they provided.