Linux is a Unix-like kernel, released under the GNU Public License. A kernel is nothing without the tools to use it with.
The GNU organisation has produced most of the system tools used on Linux systems, and some high quality applications too, like The GIMP.
The basic argument is that without GNU, Linux would be nothing. The availability of the GNU tools enabled the Linux platform to become a viable operating system, and to acknowledge this partnership between Linux and GNU, the title GNU/Linux is usually used.
: In practise, everyone just says "Linux" in conversational usage. -- DanPope