The easiest way to tell between a fake and an original is with a PSP, pop a real Pro Duo in and it will say MagicGate supported, a fake one will say MagicGate unsupported. MagicGate technology is simply a chip inside the PSP that communicates with a MagicGate chip inside the Pro Duo for copy protection - presumably fake Pro Duos do not have the MagicGate chip hence the message on the PSP. Despite the fakes not having this chip they are pretty much otherwise identical to a real Pro Duo and work perfectly with devices like the PSP and my Sony Ericson cell phone. However it states on Wikipedia that
'Some devices, such as Sony's Network Walkman, will only accept Memory Sticks which use MagicGate technology.' So whether the fake Pro Duos work on all devices I cannot say, although this is the first I've heard about it.
But yeah like craig588 said main difference is that fakes are a tiny bit slower and there is a chance it will fail sooner (a friend of mine had a 2GB fail after a year or so). Space wise fake and originals are the same. On the plus though they are a heck of a lot cheaper!
I have 3 fake 2GB Pro Duos myself for use with my PSP and after 5 months'ish they're still all working fine. I only paid £9-10 for each of mine, which is a bit better than the £70 the original Pro Duos retailed for at the time!
As for slow speeds they seem alright to me, and anyways, playing a game from a memory stick is billion times faster than waiting for a UMD to load... zzzzz. And I wouldn't worry about the fakes failing, hey if they do fail within a year or two, flash memory drops in price so fast by then we'll probably be able to pick up 4-8GB Pro Duos for $10!