EDIT The Ampersand represents the word \"and\" is a ligature of the letters of the word \"et\", which is Latin for \"and\".
The name of the Ampersand originated from its traditional role in the English Alphabet, until quite recently it was regarded as its 27th letter. The alphabet hence was recited as follows: \"...x, y, z, and per se and\".
\"Per se\" means \"in itself\" (the symbol for): \"...x, y, z, and the symbol for and\"

Ampersandland at Flickr

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EDIT History
The Ampersand evolved out of necessity, it helped to make writing by hand fluently and therefore more quickly. It is not really possible to find an exact date for when the Ampersand evolved, it was a gradual change over the centuries where scribes used the techniques they learned from others and adapted and improved them.
One of the first written examples of a ligature resembling an ampersand is found on a papyrus from about 45 A.D., there's also a Pompeian graffiti from about 79 A.D. Both are written in early Roman capital script, common a the time. For the roman capital there was also a combination of the letters E and T that was more boxlike in its appearance.
When the Carolingian minuscule was developed in the 8th century the Ampersand was already pretty standard usage for scribes. Sometimes they even used it to replace the letters "et" within a word (&iam instead of etiam, ess& instead of esset, dissider& instead of dissideret). At that point, the Ampersand pretty much had the shape that was used when letterpress printing began and that we know today.
Until medieaval times there also existed another charactershape with the same meaning, found in tironic notes, a kind of medieval shorthand invented by Tiro, the secretary of Cicero. It was basically a right angle open to left bottom side, like a simple 7. It is encoded under U+204A.

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EDIT Use
The Ampersand has its origin in handwriting, but it is more and more replaced by the actual word \"and\", In Germany, grammatical rules even forbid its use in normal sentences. Interestingly, in areas where the notion of quick writing comes to mind (conversation in chat rooms and via email) the use of the ampersand is quite common even though it might be shunned in formal writing.
Its main use today are company names (Smith, Jones & Williams) where it indicates an equal partnership and not a late addition of one member to the others. But where a + is used instead, it rather indicates a fusion of two firms that still remain separate in most aspects but formal ones.
For many other kinds of collaborations it also seems to hold true that a + shows a more formal collaboration, where two parties might both have worked on something but not necessarily at the same place, or, like with books, screenplays, pieces of music, at the same time. When a & is used it is quite safe to assume that all members of the group really have worked together simultaneously and equally.
Just when used for titling, like on books or the titles of TV-shows, it might be more of an aesthetic than textual decision if the ampersand or a plus is used.

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EDIT Typography
The Ampersand is part of every latin alphabet and exists in a very wide variety of shapes. It is often a characteristic of a certain font and leaves a lot of freedom to every typedesigner, especially the livelier forms of ampersands found in italic fonts. The italic ampersands still very much show the shapes of e and t whereas roman style fonts have the more set form "&" we all know.
Some fonts, notably high quality open type ones, even have more than one ampersand to choose from.

 jsw 

EDIT Informatics
The Ampersand has various uses in different computer languages.
In BASIC, in indicates that a variable is of the type long (32 bits) and is also used in the middle of two strings to connect them.
In Unix, an ampersand at the end of a shell (command line) indicates that this command is supposed to run in the background.
In SGML, XML, and HTML, the ampersand introduces an SGML entity. the ampersand itself is encoded in HTML as "&".
In some computer languages the ampersand indicates the "logical AND".

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