Spelled out nicely here:
http://www.d20srd.org/srd/combat/specia ... ctions.htmOverview:
Delay moves you later in the init step. You basically let others go instead of you, and when you do choose to act, then your turn is there. This is usually bad. The use of it is usually to wait for a poor initiative roll from an ally: for instance, delaying your action so that the cleric can buff you, or the wizard can cast haste, or put down a solid fog or a wall of iron. You could also in theory use it to delay to right after an enemy who is playing a responsive game with you, but that's very rare and basically gives him a free round- and even then, the actions of your allies have to make this worth it.
When you delay, you don't 'split your round', you just shift where your turn takes place in the initiative order.
Readied action *does* split your round. Readying an action is a standard action (we've been playing it 100% correctly), and you can ready anything less or equal to a standard action. So if my turn is at 15 and I move forward (with my move) and ready an action to cast Fireball when I first see an enemy (the DM might make me state, when I first see a troll, or when I first see someone who isn't in the party, which would work out badly if the trolls are disguised, or if a puppy pops out before the trolls), then my turn is over, and I have a readied action wating to go. If a troll comes out at init count 7, I blast away with my fireball. From this point forward, my init count is 7, and RIGHT before the troll. When 15 comes around next round, I don't get to move, or shoot, or anything: my init count is now 7.
You can use readied actions to punch a dude about to cast a spell, or grapple him. I'm pretty sure you can ready an action to move away from a monster when it moves towards you.
