We get asked this question more often than any other question regarding the U.S. Hispanic market and there has been quite a bit written on the subject. We use the terms interchangeably. It is a matter of personal preference. We are more likely to use Hispanic when we talk about the group as a potential business market, while we tend to use Latino when referring to the people. Latino sounds much better in Spanish than “Hispano”. In fact, the word is a Spanish word, while Hispanic needs to be translated. Some argue that the term “Latino” includes everyone from “Latin America” and would therefore include people from Brazil (who speak Portuguese). Other say that the term "Hispanic" is wrong because it literally means "from Spain" and Hispanic American heritage goes further than just Spain. Most Hispanics, however, do not really care and are not offended by one term or the other.
For further information see the post Hispanic or Latino? on the Latino Opinion blog.