It is all in how you twist it.
Here is the definition:
<B>In addition to the UL level rating for wire (level 2 and 3 fire rating required for in-wall installation), twisted pair cabling is rated by a "category" specifying essentially the number of twists each pair has per unit of length. I never really found the specifications for the actual count of twists per foot for each category, but it really boiled down to the most common types of wire being category 3 and category 5 TP cables. Cat 3 cable is commonly used for 10BaseT wiring, which is 10 Megabit per second LAN specifications often used for Ethernet networks. Cat 5 cable is much more tightly twisted, and can support up to 100 Megabit networks (Token Ring, Asynchronous Transfer Mode, etc.). Most companies are moving toward installing cat 5 wiring to plan for such 100 Mbit systems; if it is good enough for 100 Mbit systems, it is good enough for me! Cat 3 wire is usually better than what phone companies install in houses for phone wire (phone cables don't really need much twist), so I used it for phones. So why did I install both? Well, though this is relatively cheap wire, cat 5 wire is still about twice as expensive as cat 3; I wanted two separate cables to avoid cross-talk; and the cat 3 cable I got was tan colored while the cat 5 cable was purple, so it was easy to distinguish during installation and maintenance. Of course, this was only valid since I needed multiple 1000' spools of cable; if you only need one spool, it may be more economical to just get one spool of cat 5 cable. I did not use shielded cable since everyone I talked to thought unshielded was fine as long as I was using cat 3 or cat 5 (shielded cable is much more expensive). BTW, yes, there is a category 4 cable, but it is not used much due to the more common use of category 5 for high-speed LANs.</B>
<A HREF="http://www.wildtracks.cihost.com/homewire/tp_wire.jpg">Here</A> is a picture of both