[steveklabnik]

On a super pedantic level, "parameters" are the names that you write in the function definition, and "arguments" are the values you pass as parameters.

  def name_length(person)

  steve = Person.new
  name_length(steve)

Here, 'person' is a parameter, and 'steve' is an argument.

Most programmers use them interchangeably.

[learc83]

We called those 2 terms "formal parameters", and "actual parameters" if I remember my programming language concepts class from college correctly.

[sdegutis]

I've never been to programming college but in 10 years I have always heard them as def(parameters) and call(arguments). Probably a lot of that was when reading about how VMs and compilers work, though.