Step 1: It's the Performance, Stupid!

There's little doubt that AMD's K8 Athlon64 processor is currently the fastest architecture available. The Athlon64 architecture is superior to Intel's Netburst (the architecture that drives the Pentium 4) in every which way, and Intel's band-aid fixes have not been enough to keep up with the perpetual underdog from Austin. It's true that Intel does have a real winner with its Pentium M and Pentium III pedigreed Core Duo, but these are primarily mobile CPUs, and consequently beyond the scope of what I'll be speaking on.
What was it that happened to so dramatically shift the position between Intel and AMD's processors?Why is Intel faltering on the desktop front and AMD winning the hearts and minds of geeks world wide? It certainly isn't for lack of advertising, but that's another story.
The real reason for all of this upheaval and change is Intel's Netburst architecture. It was supposed to last for 10 years when it was introduced in 2000, however that lifespan was cut short in 2003 when Intel struggled so publicly with the Prescott core. The initial product was full of kinks, its performance was lousy, it suffered from voltage leakage, and it was pretty obvious that many of its faults were due to the way Intel "improved" its processors from one speed generation to the next. The days of the good old die shrink and ramp up are certainly dead now.
After some initial questions to the necessity of a 64-bit processor in a 32-bit world, AMD's Athlon64 processor was well on its way to becoming the sweetheart of computer geeks. It's efficient core architecture allows the Athlon64 to handle more work per clock cycle than the Pentium 4/D (which was also the case with AMD's previous generation), so more gets done with less so to speak.
Intel's wildcard has always been its special CPU SSE series instructions, but that advantage has also dwindled away. While AMD's parts often do not support the latest Intel instructions at the time of introduction, the company does tend to integrate them in time to coincide with the release of software that uses these new features. In fact, if you look at the enhanced instruction sets in the latest AMD Athlon64 processors, you'll notice that it supports more instructions than an equivalent Intel Pentium 4 processor!
Perhaps Intel's one saving grace is that the Pentium 4/D can still overclock quite well, with a little inventive cooling it will achieve frequencies that AMD users can only reach with extreme cooling. Realistically though as nice as the round numbers are, these are empty goals. An Athlon64 may be clocked a whole gigahertz slower than a Pentium 4, but it still performs much better in benchmarks; the correlation between frequency and performance is pretty much dead.
On the horizon, Intel's upcoming 'Conroe' core is starting to look like it might give AMD a run for its money, but it's not available yet so comparing it with current technology is not appropriate.