GPRS, or General Packet Radio Service, is a technology used to carry data over a cell phone network. The use of the term can be confusing: it can refer to the technology used in both 2G and 3G services, or as a way to distinguish the two.
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Introduced with the second generation of cell phones (2G handsets), GPRS is the method used to carry data over the same network used for voice calls. It makes it possible for cell phones to access services such as SMS messaging and Internet browsing. GPRS is standardized, meaning a handset can access data over different cell phone networks; this doesn't override the limitation that some handsets can't broadcast or receive on the frequencies used by all networks.
2G vs 3G
GPRS technology is actually the basis of data transfers on both 2G and 3G handsets and networks. However, much of the marketing for 3G handsets and networks was based around the fact that they offer faster data connections thanks to tweaks and enhancements to GPRS. Many handsets therefore display the characters "3G" to show they are connected to the faster network, but show "GPRS" to show they cannot connect to a 3G network and have instead connected using only the basic GPRS technology.