<p>Which is a better format to store graphic assets for a Flex application, SWF or SWC?</p>

<p>Are there any real differences, and if so what are they?</p>

SWC is what you use when you're looking for a library to compile into your app. You have access to the classes and can import individual parts. SWF is more likely what you're looking for when embedding graphics.
Here's the docs you might be interested in:
http://livedocs.adobe.com/flex/3/html/help.html?content=layoutperformance_06.html#223998
I've been having good success with SVG for images, but there's some caveats since Flex only implements a subset of the features.