Hi JimTh,
Everything 9supercomp said is true, but I could add a couple of thoughts. It is unfortunate that S&W has dropped many of their dedicated .38 Spl.s from their product line because the .38 Spl. is a classic cartridge with some merits of it's own that have become lost in the rush for ever more horsepower. Shooting .38's in a .357 can create some (minor, but annoying) problems when it comes time to clean the gun because the shorter .38 case leaves a ring of carbon build up just ahead of the case inside of the cylinder. This can be difficult to get out and can even interfere with chambering the longer .357 case. For this reason, when I shoot my model 686, I always start with .357s and then when I'm done with them switch over to my .38s.
Additionally, because of the longer "bullet jump" from the cylinder into the forcing cone required for the .38 bullet, there is a slight sacrifice in accuracy when shooting .38s in a .357 Mag. gun. The casual shooter will never notice this, but it does exist.
The .357 Magnum is also prone to "Magnumitis". The .357 Mag. cartridge operates at very high pressures for a handgun (over 35,000psi for hot loads). This can and does translate into higher maintanence costs if you shoot your gun a lot. After approx. 1,200 rounds of full power .357 loads my 686 was ready for a trip back to Smith to have the forcing cone refinished and the barrel set back. There is also visible flame cutting at the top strap. The .38 Special cartridge is MUCH kinder to the gun.
Just some thoughts. Good luck with your choice.
Coolio