For those who don't know both Magento and Drupal are PHP frameworks for developing websites. This means that developing a basic site with a content management system (CMS) becomes standardised and enables us to develop these sites much faster than without the framework. Both are used by thousands worldwide and are rapidly becoming considered the best in their fields. Here at iNet we've got experience working with both on some pretty big sites and it's interesting to see the strengths and weaknesses of both.
Magento is an e-commerce solution. This immediately differentiates it from Drupal in the sense that it is much more specific in it's operation. If you're looking to make a classic e-commerce website then use Magento. Without a doubt the best e-commerce software available. The greatest thing about Magento is it's functionality immediately after installation. This makes it mind-boggling simple to produce a website with products, especially if you populate the site with example content pre-installation. It also has some great themes available both for free and at a premium (I'm sure there's another blog post in that at some point), it doesn't take much hunting around to find something that's pleasing to the eye and great for users.
There are a couple of things that could be improved upon. The biggest issue is with certain unintuitive functions in the administration area. These are almost all due to the flexibility Magento has in using a single administration panel for multiple sites. It's nothing huge, and it shouldn't put off any potential users but there can be a frustrating learning curve after seeing how much the site can do directly after installation.
Drupal is a fully fledged CMS for any type of site. If you're looking to build a functional site with reasonably standard functionality particularly social networking functionality then Drupal is for you. But what about selling products on a Drupal? Well Ubercart (the Drupal shopping cart) has some great functionality but it's not on the same level as Magento in terms of an out of the box product. It certainly works, and it integrates perfectly with the rest of your site which is the real selling point. If you're looking to build a website AND sell products then Drupal is perfect.
In order to decide you need to think what you really want from your site, do you want a pure e-commerce site or are you looking to incorporate forums, blogs .etc.? If you're looking for best of both then Drupal is still probably your best choice, just make sure you've got the ability to configure Ubercart to function exactly how you need it. If you can't, get in touch with the pros.