These days "innovation" seems to be the buzzword of choice among russian politicians led by the President Medvedev. As it often happens with politically charged words few people really understand the original meaning of "innovation" and just accept it as a general term for any kind of "sciency" stuff. The confusion grows when more words like "nano-technology" get thrown into the mix.
Science is the most well-defined concept. It is a method of gaining new knowledge about the world in its entirety. The simplest description of the scientific method reads as follows: one makes a prediction which is called "conjecture", then plans and performs experiments to either prove of disprove the conjecture. Proven conjectures are established as facts and form the body of knowledge.
Doing science requires a creative and industious mind to first come up with ideas and then thoroughly pursue the proving process. People who create knowledge with science are called scientists and this profession is of course one of the most respected since the dawn of civilization.
We usually distinguish between fundamental and applied science, the former being more about abstact concepts that are of no use to anyone except other scientists that in their turn apply fundamental theories to the real life problems. That is how technologies are born which are methods to solve problems by using scientifically obtained knowledge. If science is knowing that sugar is sweet then technology is a method of creating delicious morning beverage by adding some sugar to hot tea and stirring with a tea spoon.
But in modern complex world coming up with technologies is not enough. We do not only want to have methods of solving problems, we also want to actually solve as many problems as possible using as few resources and time as possible. And that is where innovation happens. It takes knowledge one step further and applies technologies to business trying to create a sustainable cycle of solving many problems effectively.
Innovation requires less scientists and more entrepreneurs and managers. It is the deploying step when the work of scientists and technologists starts helping people. Innovation is also a process as opposed to technology. You may start and stop innovation and you can measure its results. Which means that innovations are also projects with goals and budgets. Many talented scientists won't be happy and productive doing innovation instead of scientific research.
We should understand the actual meaning of science, technology and innovation if want to talk about them.