Why are 2"x4"'s really 1.5"x3.5"?
The 2x4 refers to the rough-cut green wood: it shrinks during drying, then the dried wood is planed smooth, so the finished lumber is supposed to end up at 1.5"x3.5".  While it doesn't really shrink that much, the mills get more usable finished 2x4's from a given tree if they cut them slightly smaller to begin with.

Here's the Wikipedia article about it.