Procedures V. Functions

The place where I work is moving to MS SQL Server from Lotus Notes. I
have done a lot of coding in Lotus Notes, and have, I suppose,
intermediate skills in basic SQL -- queries, insert, updates, table
design, etc. I have a couple of questions, however. First, stored
procedures vs. functions. In my world, a function is a body of code
that returns a value; a procedure is a body of code that does things
but does not return a value (other than an error if it fails). At first
blush, MS SQL seems to follow this distinction. But further reading of
the Books Online and paper books (like Advanced T-SQL for SQL Server
2000) demonstrate that stored procedures also return values. So, why
use one over the other? Apparently, I can debug SQL stored procedures
(haven't tried yet) and it looks like I can't debug functions. On the
other hand, I can use a function in an SQL statement but I can't use a
procedure (I think). So, if I want to take two columns and do some
hand-waving over them to make a third column for each row in a row set,
I need to use a function.
I guess the above gives you a sense for what little I know. What are
people's thougts on functions vs. stored procedures. What's a good book
that might give me better insight into these sorts of issues without
spending a lot of time on what a left outer join or a derived table is?

Thanks.
BD