• hotcopy makes a direct copy of the repository. It is fast, but it keeps information about the underlying file system etc. The server where the copy is imported needs to be the same version, have the same config etc.
• dump is version independent. This means that the exported copy can be used by any version of svn.

IMHO: dump is better for backups and long term archiving (outside a repository) [like a tape in a vault].
hotcopy is better suited to make a quick copy to another server when the other server is up and running.

The base information for this post was found in the svn maillist