PhoneGap is a framework to build Hybrid Apps, while Titanium is a framework to build Native Apps.
When building for mobile devices you can take one of three approaches: Web apps, Hybrid Apps or Native apps.
Web Apps are websites designed to fit in mobile screens and are accessed by typing a URL in the phone’s browser. There are multiple UI frameworks that can make your Web app look like a native app, or you can build it using media queries to make it responsive to the web browser’s dimensions.
Hybrid Apps are Web apps that are packaged in a custom full-screen browser to resemble a native mobile app, with extensions that provide access to some hardware features, but your user interface is still written in HTML/CSS and rendered by a web browser.
Native Apps are written using different languages depending on the platform. Native apps have full access to the hardware and the user interface is rendered by the platform SDK.
More on this can be view at : http://www.appcelerator.com/blog/2012/05/comparing-titanium-and-phonegap/