I have discussed this topic before but felt that Fred Wilson really captured the essence of CTO vs VP of Engineering with his write up here http://www.avc.com/a_vc/2011/10/vp-engineering-vs-cto.html
I am solidly in the VP of Engineering category.
A few tidbits on the VP of Engineering category from my experience doing that job for the last 8-10 years.
First its really important for the VP of Engineering to really understand and even help shape the business goals. A huge part of the job is mapping an engineering roadmap to the business roadmap and there are frequently critical tradeoffs between the two that can make or break the business.
Second I think its good for a VP of Engineering to have one particular technical focus that they “go deep on”. This is hard as they get pulled further away from code but important as a component of their leadership for a technical team (and obviously helps good technical decision making).
I personally try and stay as up to date as I can on databases as the heart of nearly all software. I have been managing Ruby On Rails teams now and I make sure I do some coding but would not hire myself as a RoR coder. My DB background and ongoing learning and playing gives me a technical area I can contribute on and frankly its one not many RoR devs enjoy!