I'm with Spark.
There are many reasons why people do use these tools in the way they do and that's fine and personal choice and the comments below are from my experience.
In general, because of where these two applications have come from Illustrator is the tool for creating/drawing 'things' (logos, illustrations for print) and Photoshop for retouching/image modification.
Because Illustrator now has access to 'raster'-based filters and Photoshop has some vector tools, it can be confusing to newcomers which to use.
It may well be fine to create a logo in Photoshop if the style of the logo requires the effects that it has available, but these should only really by applied to a sound/well crafted logo. Effects alone don't make a good logo.
Logos created within Photoshop are bound by the document's physical size and the document's resolution. Creating a beautiful logo that can only appear on screen is fine as long as the client doesn't then want it to be used on their letterhead/van/advertising etc.
This is where Illustrator comes in...logos created as vectors allow for this scaling up and down as they are based on maths rather than numbers of dots.
Illustrator also handles Pantone colours more easily which is critical for line/spot colour jobs (i.e stationery, corporate identity, vinyl signage), but this again has blurred due to popularity(cheapness) of digital/process printing.
My advice: create good 'flat' logos in Illustrator. That's it!
Only use Photoshop to work on the 'flat' logo for specific applications (web page banner) etc.
If Photoshop is the only application available, work on a logo at A4 in size at 300dpi which should allow sufficient 'scalability' for future use.