"How is designing a service different than designing a product?"

Good question - what are we talking about? See Dan Saffer's Designing for Interaction interview with Shelley Evenson:
http://www.designingforinteraction.com/evenson.html

Shelley Evenson is an associate professor and director of graduate studies at Carnegie Mellon University’s School of Design.

"When designing a product, much of the focus is on mediating the interaction between the person and the artifact. Great product designers consider more of the context in their design. In service design, designers must create resources that connect people to people, people to machines, and machines to machines. You must consider the environment, the channel, the touchpoint. Designing for service becomes a systems problem and often even a system of systems challenge. The elements or resources that designers need to create to mediate the interactions must work on all these levels and at the same time facilitate connections that are deeply personal, open to participation and change, and drop-dead stunning."

Don't you love that? Person to person interactions to gather the information you need, not just looking through tons of Web sites and pages to get what you need? And here's a non-typical answer from an academic - she is talking about real business interaction needs and uses the term "drop-dead stunning" - don't you love it?

And from the images available by querying her name on Google - Ms. Evenson has a sense of humor ... as posted on ahn.sang-soo's site - http://www.ssahn.com/archives/2006_03.html.

Also check out - Carnegie Mellon University's School of Design site -http://www.design.cmu.edu/