From what I have seen, Documents is truly designed to be a content repository for the system administrator. In Documents you would store things like attachments to email templates, pictures you need to host on the Internet, and files for site.com sites you may have.
Content on the other hand is designed to be for sharing and collaborating on documents within your organization. It supports things you would need to do this such as version control, tracking comments and views and more.
Now, for a basic organization you could do everything under Documents. However, as you grow, you will certainly want to leverage the functionality available under Content. However, SalesForce still needs to do some work on content to make it more usable.
