System Services let other applications invoke some of the functionality from your code. AppleScript provides a similar option, allowing users to write programs combining features of your application with features of others.
These two technologies are complementary, neither replaces the other. Using system services is trivial, you just select something in an application and then click on the name of the service in the menu. This simplicity comes at the cost of flexibility. A service can only do one thing, although it can pop up a user interface asking the user to configure it.
AppleScript is much more complicated to use. It's a complete programming language and using features exported to AppleScript requires the user to write a complete, if simple, program. This puts it out of reach for a lot of users, who are frightened off by the idea of having to program, but provides a lot more power to other users.