Kilobits, Kilobytes, What The Hell?

I was just chatting with Matt, our Sports Editor, and he mentioned that he tested out his bandwith with the CNet Bandwidth meter and the bandwidth.com meter and remarked that he was shocked that he apparently had a 2,454.06 kbps speed connection, when he thought he had only 300. I had to explain that 300 Kb = 2,400 kb, because the 300 is kilobytes and the 2,400 is kilobits, since a bit is 1/8th of a byte. I upgraded my connection for free (thanks Verizon!) to 1.5 mbps yesterday, but I know that is still a little under 200 Kbps. Don't most consumer have absolutely no idea about these distinctions? And why are ISPs using bits, a scale that has no useful meaning at all, instead of bytes, which are standard usable units? I felt like it was the biggest rip-off in the world years ago when I found out my 56k connection was barely good for 7 real k's.