With WEP you pre-share the key and it doesn't change during a session. With WPA-PSK, you pre-share a starting key, but it gets recomputed as the session progresses, making it harder for wiley h4x0rz to reverse-engineer the starting key.
"b-only" means that my laptop won't talk to the g (higher frequency) radio on a 802.11g WAP, but that's not a problem, since 'g' WAPs also have a 'b' radio ('g' really means 'b/g', though it is possible to configure the WAP to disable the lower b frequencies (as opposed to 802.11a, which plays in its own sandbox). Unless you have older gear, you have to go our of your way to buy b-only now.