ISO 9660 have been used as the main CD format for many years now. Most of the CD nowsdays still use this format, the benefit of this format is that it is readable by all CD drive or CD player, and can be shared between PC and MAC.
Universal Disk Format (UDF) is a newer file system for CD and DVDdeveloped and managed by the Optical Storage Technology Association as the successor to the ISO 9660 standard. UDF overcomes limitations of ISO 9660 and redirectors such as CDFS. UDF is used to ensure compatibility across platforms, as well as among various CD and DVD applications. UDF is required for DVDs, and is used by DVD to contain MPEG audio/video streams, UDF is also used by CD-R and CD-RW in a process called packet writing that makes CD writing more efficient in terms of the time and disk space required.
Just stick with UDF if you are burning media for a friend. (Its more compatible)
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Can one give more capacity?
Its the method in which the files are written to the CD that defines it as ISO or UDF. Any CD can be an either file system.
Is one more scatch resistant then the other?
Read above.