Ripple is several things:

• A distributed ledger that does not rely on proof of work. This is accomplished by having every Ripple client keep a list of ledger-signing "validators" that it trusts not to all be in on the same malicious scheme to defraud it. This lack of collusion is what the client relies on for trust instead. The wisdom of this is debatable, but the increased transaction speed isn't.
• A system for exchanging IOUs, on top of that ledger.
• A system for paying someone who does not trust your IOUs, by finding a path of people who trust each other's IOUs through which the value can flow. Hence the name "Ripple". If you don't like this, you can just pay people in IOUs from "Gateways", which are widely trusted people with automated systems allowing you to get or cash in IOUs. The biggest one is Bitstamp, which issues USD and BTC IOUs.
• A distributed currency exchange, that works by trading IOUs from different issuers or in different currencies against each other. This is so that you can pay someone with your USD even if they only want BTC.
• A virtual currency, called XRP, which is what Ripple transaction fees are denominated in. The Ripple creators originally gave themselves all the XRP, then handed out very large amounts of it (relative to the amount needed to pay for the operation of a Ripple address) to Bitcointalk users. It can be bought on Ripple's distributed exchange, but in order to do this you must already hold some XRP. As a spam protection measure, addresses that do not hold a certain "reserve" amount of XRP are unable to make transactions. The reasoning behind this is that some transactions, like deciding to trust someone's IOUs, need to have data persistently stored in the Ripple network, so maintaining this data has to be given a cost.
• The Ripple people themselves, who currently (as far as I know) are still the only ones running any Ripple validation nodes. They provide web-based wallet software at Ripple.com, which does all the cryptography client-side, but which relies on marginally-trusted full Ripple nodes to actually interact with the Ripple network. They also still have a huge amount of XRP left, which they plan to dispense over time in order to fund development.