Using Photoshop Filters and Effects
There are many Photoshop styles available in these menus, but the difference here is that these styles in the Photoshop Filter menu are used on embedded and rasterized objects, while Effects menu styles can be applied to vector items. These Photoshop Effects will be rasterized when outputted, but give the same flexibility in editing as Illustrator Effects.
Source: Filters and Effects in Adobe Illustrator: Understanding the Difference
Figure 7
The downside to using filters is that they are destructive. When you apply a filter, the operation permanently alters the image and cannot be removed or edited later.
Source: Design Learning Guide for Fireworks: Selecting and editing bitmap images | Adobe Developer Connection
About Effects
The primary difference between a filter and an effect is that a filter permanently modifies an object or layer, but an effect and its properties can be changed or removed at any time.
Source: Adobe Illustrator CS4 * About effects
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As you can see from just a couple references all over the net (Even Adobe themself), They all refer to "Filters" as not being able to be edited again once the file is saved, thus embedding that layer with the filter. The newer Effects & special svg filters are a bit different, while the master files are a bit heavier, they save both the vector data & the embedded data (before & after the effect / svg filter was applied).
The newer software releases are starting to address the filter embed issue that many print shops run into problems with when they need pure lines/paths to follow on their machines (E.G. Vinyl plotter / Die cast / Screen press / Silk press / Embroidery machines / etc..). The newer "Svg Filters" are a great solution to some of those problems.
As long as a filter / effect can be removed after a file is saved, you should be fine, however, if you lose the ability to edit the saved file at a later date & or remove a filter, it might be best to choose another method / solution for your design needs. Mainly for those that like to deal with pure vectors & a variety of print / media machine compatibilities.
PS & Illustrator are both Great programs. Whilst PS does have minimal vector tools / capabilities, it's best to switch & learn Illustrator if you want to become more serious about your vector file deliveries to help insure your clients don't run into any snags down the line.
And vice versa, if you are an illustrator user & want to get more serious about image editing / manipulating / & web templates, then switch & learn PS so you can focus more on your strong points with raster based design.
At the end of the day, It all boils down to the right choice of tool for the project.

Recap: Filters normally can NOT be edited and Effects normally can be edited, However, even an effect is embedded as a raster layer in the output file until you remove the effect & re-render without it so that you can have a Pure vector file for designated lines/paths print machines to read the data on.
Solution: So you don't create more work for your client in the future, provide 2 output files, one with the effects & one without the effects. That way they already have the files they need no matter what type print machine they choose to use for reproduction. Most clients don't know how to use the design software's we use, so making their life easier will inevitably lead to more repeat / referral work for you from them in the future.
Edited by scorpionagency, 05 February 2010 - 06:13 AM.