Paytunia is a more integrated approach, it integrates seamlessly with Bitcoin-Central.net, it gives you full account history and a bunch of additional features. It is mostly intended for long to medium term storage of funds, and mobile usage through the Android and iPhone app.
Instawallet is focused on "just working", you visit it, *boom* you have a wallet, you can access it on the go with FriendlyPay (released on the AppStore, and soon on Google Play). It gives instant gratification, you send funds to it, it's updated immediately with a comforting cash-register sound. It's targeted to newcomers, and paranoid advanced users (it's very lightweight, making it perfectly suitable for Tor access).
The big plan is to integrate these tools (and others to come) very tightly in order to provide a seamless experience for anyone who want to do business with Bitcoins or keep them as investment. There's gonna be more on all this soon
...or maybe the interest in obtaining Instawallet was as a way to fund someone's retirement?