At a very high level, the difference is that a "software based" platform like they 7200 will use Cisco Express Forwarding (CEF) which is very efficient but still uses the CPU of the 7200 which it has to share with other control plane activities like route learning. This also means that as you add features, it takes more cpu cycles to switch each packet, so the performance will be reduced.
A hardware switching platform like the GSR (or ASR1k) has specialized switching hardware so the work of switching each packet is offloaded from the core CPU, allowing the CPU to focus on control plane activity. The GSR has the added advantage that each line card has knowledge of the routing table, so it can forward traffic independently, thereby enhancing the system wide throughput. We don't call the GSR line cards VIPs (that was only for 7500 series routers). We just call them line cards, and they get their routing information from the Performance Route Processor (PRP). Adding features to hardware based switching platforms doesn't have near the performance impact, assuming it's one of the features supported by the switching hardware.
Hope that helps.
