Can someone explain the British Royal family to me?

With all this talk of the British Royal family the past few days, I realized that I have no clue what is going on.

Tell me if I’m right. So Queen Elizabeth II is queen because her father was king, but her husband isn’t king because he’s not from the royal bloodline. Prince Charles will become king when QE2 kicks the bucket because he is from the royal bloodline.

Another thing I don’t get is why Princess Di was a princess, but Camilla is a duchess. What the hell is a duchess anyway?

Will Kate be a princess? Why does my head hurt?