None other than Jim Allchin, the soon to retire Co-President of the Platform and Services Division at Microsoft, explains the new power management on the Windows Vista Team Blog.
He explains the rationale behind the Sleep and the new Hybrid sleep options.
This had been a mystery for me when I couldn't find the Hibernate option in Windows Vista. Eventually I found the answer in Windows Help and Support. The separate Hibernate option in the shutdown menu is missing by design when Hybrid sleep is enabled. Windows Help explains the difference between Sleep and Hybrid sleep. Hybrid sleep is a combination of Sleep and Hibernate: when your computer goes into hybrid sleep the contents of the RAM is dumped to disk but the RAM remains powered, so your computer is quickly available for use when you return. When you cut off the power to the computer or it looses power, everything is safely on disk and hybrid sleep is indistinguishable from hibernate.
The default Turn off option through the power button in the Start menu is Sleep for laptop computers. For desktop computers it is Hybrid sleep.
Check out Jim's post for the full story.