Just like the stem of a plant, which can sprout more specialized structures like leaves, flowers and fruit, a stem cell is the predecessor of many different kinds of cells. A fertilized egg is the ultimate "stem cell", because this one cell has the ability to become thousands of different, highly specialized cells (for skin, heart, lungs, etc...). In the course of development, the genes that encode proteins important in heart muscle cells, for example, are turned off (not needed) in skin cells and vice-versa. So, unlike stem cells, skin cells can only give rise to more skin cells. Another important characteristic of stem cells is that they can divide indefinately....more specialized cells can only divide for a while before "running out of steam". Blood stem cells are crucial to our survival, as they constantly replenish red and white blood cells and platelets.
Researchers discover the "fountain of youth" of stem cells: Article (requires paid subscription to journal Nature)
Stem cells from cord blood (see below) can be used to treat Hurler's syndrome (a degenerative disorder in children causing central nervous system deterioration and death), even from unrelated (non-family) donors. (May 6, New England Journal of Medecine)
Usually from embryos from IVF (in vitro fertilization) clinics that were in excess of what was needed to assist a couple in conceiving a child or cells from fetal tissue from terminated pregnancies. Thus the ethical dilemma. Stem cells may also be obtained from adult tissue but they are more difficult to find and extract and are potentially less useful than cells obtained from fetal or embryonic tissue.
Embryos may not be necessary to stem cell research: see the journal Nature Vol 423 No 6938 p381
Blood from umbilical cords and placentas (normally disposed of after birth) are also a source of stem cells. These cells can be used to treat people with cancer or immune disorders and are more likely to be accepted by the immune system of the patient. For more information: Cord Blood Donor Foundation
Stem cells from the circumcised foreskins of newborn boys can be used to grow
skin for skin grafts, thus helping burn victims. One foreskin can generate enough
skin to fill 6 football fields!