What is difference between Piconet and Scatternet ?

A piconet is the type of connection that is formed between two or more Bluetooth-enabled devices such as modern cell phones or PDAs. Bluetooth enabled devices are "peer units" in that they are able to act as either master or slave. However, when a piconet is formed between two or more devices, one device takes the role of 'master', and all other devices assume a 'slave' role for synchronization reasons. Piconets have a 7 member address space (3 bits, with zero reserved for broadcast), which limits the maximum size of a piconet to 8 devices, i.e. 1 master and 7 slaves.

A scatternet is a number of interconnected piconets that supports communication between more than 8 devices. Scatternets can be formed when a member of one piconet (either the master or one of the slaves) elects to participate as a slave in a second, separate piconet. The device participating in both piconets can relay data between members of both ad hoc networks. However, the basic bluetooth protocol does not support this relaying - the host software of each device would need to manage it. Using this approach, it is possible to join together numerous piconets into a large scatternet, and to expand the physical size of the network beyond Bluetooth's limited range.

Piconet	Scatternet
In this bluetooth network, device can function either as master or slave.	In this bluetooth network, device can function as master or slave or (master+slave)
It serves smaller coverage area.	It serves larger coverage area.
It supports maximum 8 nodes.	It supports more than 8 nodes.
It allows less efficient use of available bluetooth channel bandwidth.	It allows more efficient use of available bluetooth channel bandwidth. Scatternet (master=red, slave=green, parking=blue)

What do you mean by Piconet ?

A piconet is a network of devices connected using Bluetooth technology. The network ranges from two to eight connected devices. When a network is established, one device takes the role of the master while all the other devices act as slaves. 
             Piconet gets its name from the word "pico", which means very small. This very small network is so called because the number is limited to seven devices, plus the master, which limits network and data sharing capability. Data transfer rates vary from 200 to 2,100 kbps at the application. 
                  A piconet is sometimes called a personal area network (PAN) because the range of optimal operation for Bluetooth is 10 meters, about the size of a living room.