Press release distribution: News issued to members of the press through agencies, systems and services.
News release distribution: Systems that allow news to be posted to websites to help gain exposure and to help influence rankings through the links.
There's no substitute for true press release distribution, using whatever method is appropriate. Issuing press releases to the press contacts is probably the most effective method, but it really helps to know who the press contacts are. This is where agencies come in to the equation. If you don't know members of the press, and don't have the resources to do that for yourself, employing an agency is likely to be more cost-effective.
Distributing news releases via any an automated service is only good for the quality of the contacts on their system. In very simple terms, the more you pay the more likely they will have the eyes of a press. The low cost web-based news distribution services were hit in the most recent Google slap and the appearance of news on their site is no guarantee of ranking or appearance in the SERPs. In fact, now it's less likely to appear in the Google SERPs.