I don't use either and have, to my my knowledge, never been on either of their websites so I don't really know what they do. But I have a strange feeling that they are killing music.

So what are they? What do they actually do? Is it worth me signing up to either of them?

As far as I can tell, the only point of last.fm is to show that you're more indie than other people as it shows a list of what you've been listening to. It goes back to the idea that the internet has given nobodies the impression that other people they don't know care about their opinions.