As far as I can tell, the Collected Addresses is just a separate abook in which you can put addresses that are collected, rather that jamming up your Personal Address Book.
Prior to NS 7.1 (Moz1.4) you could collect INCOMING addresses via the UI. You could also LIMIT the number (size) of Collected addresses.
NS 7.1 (Moz1.4) and above, does not have the UI ability to collect INCOMING, you have to set it thru about:config or prefs entry.You can not limit the size of Collected Addresses book.
There are a couple of other interface differences that do not amount to much. Otherwise I can see no real difference between the two.
Hope this helps.