As I understand it (usual talking b******s disclaimer applies), In the UK you have live, neutral and earth coming in to the property.
The Neutral and Earth are connected together at the substation so are effectively the same.
The Live carries 220v AC which means it goes from 0v to 220v and back every 20 milliseconds (50hz) but as voltage is only a potential difference between two points, the 220v AC is relative to the Earth/neutral.
The reason we earth *everything* in the UK(including water/heating pipes etc) is so that if a stray live wire touches anything metal, it will take the shortest route to earth, ie down the wire to the substation rather than through the poor sap touching it.
The problem with this is that if for some reason you have a dodgy or broken earth, a faulty live can potentially[1] make everything that is earthed live (very rare though).
If you have circuit breakers fitted, and you really should, these will generally trip out if anything untoward happens and stop you getting a shock.
Some countries take the alternative view that if you only earth stuff that really needs it, like toasters, kettles, heaters etc, then if your hairdryer goes duff, your bath taps won't go live. Again, circuit breakers will pop out as soon as the appliance starts failing and should prevent shock (and can also prevent them catching light).
