They are completely different breeds, with collies being the older of the two breeds and originating in different areas, although thought to have a common ancester. Shelties are not, as so many seem to think, miniature collies, except in looks. I had collies and was around a lot of collies and shelties and overall their temperments are pretty different too (this has been my personal experience and isn't meant as an all-encompassing "fact" as there are always exceptions!).

I found shelties to be more highly energetic and needing of a job to do. My collies had high energy when they were outdoors but inside became big lazy rugs, unlike the shelties I have been around . They are both herding breeds and have herding breed traits. My collies were calm and laid back and generally more trusting and easy with all types of people/children than many shelties I have been around. This is NOT to say that shelties can't be just as good with kids, I just personally experienced that collies were more tolerant.

Anyway, I found this article that explains more about the origins and differences, some of which is obvious but might answer some of your questions .

http://hem.passagen.se/nightwin/articles/colltie.htm