Saw a wonderfully salient article today on how tech teams should be built out. This is overly simplistic, but it does a great job of defining the CTO/VP Engineering distinction:

A summary of the positions:

• CTO - Technical visionary. Sets the tone for the technical underpinnings of your company. Not process oriented, they are the pure technologists who set the tone.
  
• VP Engineering - The person with technical chops, who doesn't do coding, who defines and executes the process and leads the engineering team to develop product.
  
• Program Manager  - This can also be called a product manager, but this person is basically the first person to form the "product" team (separate from engineering). They are responsible for updating the rest of the company after engineering produces the product; interfacing with sales/marketing/pr.
  

It's a good article - give it a read.

A couple of notes I'll add from personal experience: for the best success of any engineering team, the VP Engineering and CTO have to work in incredibly close sync. The VP Engineering is going to have a tendency with his nose on the grindstone, to start pushing things in a certain direction which may not be consistent with the overall vision of the CTO. The CTO, without close input from the trenches might start become an architect astronaut. Ensuring these two are in lockstep is going to produce a visionary product that sells.