You can't have hard links between file systems. You can't have hard links on directories. If a hard link target is deleted, it still exists as the hard link. If a soft link target is deleted, it dangles.

bilbo$ cd /tmp
bilbo$ mkdir test
bilbo$ cd test
bilbo$ ll
total 20
drwxrwxr-x    2 hendry   hendry       4096 2004-07-06 11:43 .
drwxrwxrwt   17 root     root        16384 2004-07-06 11:43 ..
bilbo$ touch file
bilbo$ ls -i

    816039 file
bilbo$ ln -s file symbol
bilbo$ ln file hard
bilbo$ ls -il
total 0

    816039 -rw-rw-r--    2 hendry   hendry          0 2004-07-06 11:43 file

    816039 -rw-rw-r--    2 hendry   hendry          0 2004-07-06 11:43 hard

    816040 lrwxrwxrwx    1 hendry   hendry          4 2004-07-06 11:43 symbol -> file
bilbo$ echo test >> file
bilbo$ ll
total 28
drwxrwxr-x    2 hendry   hendry       4096 2004-07-06 11:43 .
drwxrwxrwt   17 root     root        16384 2004-07-06 11:43 ..
-rw-rw-r--    2 hendry   hendry          5 2004-07-06 11:45 file
-rw-rw-r--    2 hendry   hendry          5 2004-07-06 11:45 hard
lrwxrwxrwx    1 hendry   hendry          4 2004-07-06 11:43 symbol -> file
bilbo$ echo test >> file
bilbo$ ll
total 28
drwxrwxr-x    2 hendry   hendry       4096 2004-07-06 11:43 .
drwxrwxrwt   17 root     root        16384 2004-07-06 11:43 ..
-rw-rw-r--    2 hendry   hendry          5 2004-07-06 11:45 file
-rw-rw-r--    2 hendry   hendry          5 2004-07-06 11:45 hard
lrwxrwxrwx    1 hendry   hendry          4 2004-07-06 11:43 symbol -> file

Notice the 2 which shows how many references to the Inode.

bilbo$ rm hard
bilbo$ ll
total 24
drwxrwxr-x    2 hendry   hendry       4096 2004-07-06 11:46 .
drwxrwxrwt   17 root     root        16384 2004-07-06 11:43 ..
-rw-rw-r--    1 hendry   hendry          5 2004-07-06 11:45 file
lrwxrwxrwx    1 hendry   hendry          4 2004-07-06 11:43 symbol -> file
bilbo$ rm file
bilbo$ ll
total 20
drwxrwxr-x    2 hendry   hendry       4096 2004-07-06 11:47 .
drwxrwxrwt   17 root     root        16384 2004-07-06 11:43 ..
lrwxrwxrwx    1 hendry   hendry          4 2004-07-06 11:43 symbol -> file
bilbo$ cat symbol
cat: symbol: No such file or directory
bilbo$

Only case I can think where a hard link would be useful, is where you want to make sure the file isn't accidently deleted. All hard links must go before the file goes to bit heaven. Summary: Use soft link