From Seo Wiki - Search Engine Optimization and Programming Languages
Organic search results are listings on search engine results pages that appear because of their relevance to the search terms, as opposed to their being adverts. In contrast, non-organic search results may include pay per click advertising. The phrase was coined by writer John Kilroy in an article written in 2006.
The Google, Yahoo!, and Bing search engines combine advertising and search results on their search results pages. In each case, the adverts are designed to look like the search results, except for minor visual distinctions such as their background colour and/or placement on the page. Further, the appearance of the adverts on all major search engines is so similar to the genuine search results that a large majority of search engine users cannot effectively distinguish between them.
Because so few ordinary users (38% according to Pew) realised that many of the highest placed 'results' on search engine results pages were actually adverts, it became important within the search engine optimization industry to distinguish between the two types of content. As the perspective among general users was that all the results were in fact 'results', the qualifier 'organic' was invented to distinguish the real search results from the adverts. Because the distinction is important (and the word 'organic' has many useful metaphorical uses) the term is now in widespread use within the search engine optimisation and web marketing industry. It is, as of July 2009, now in common currency outside the specialist web marketing industry, being used frequently by Google (throughout the Google Analytics site for instance).
Google claims that their users click (organic) search results more often than adverts, which has led them to rebutt the research cited above.
The same report (and others going back to 1997) by Pew shows that users avoid clicking 'results' that they know to be adverts.