Okay, let's rehash this for about the thousandth time....
38 v 357 - The .357 has more punch and, as a result, more recoil and more muzzle flash. The .38 has less punch, but also a corresponding reduction in recoil and muzzle flash. Either will wreck the BG's day given even remotely decent shot placement with ammo designed for personal defense.
Are .38's accurate in a .357? What little degredation there is in inherent accuracy is much less than the usual amount of shooter induced error. Unless you are an extremely good shot, or are shooting from a machine rest, you should see little - if any - difference in accuracy. Before the screaming starts I will state that I am NOT talking about shifts in point of impact which will inevitably occur as a result of ballistic differences between the two catridges. My concern is whether the gun will group well with either load (and most will). As long as a gun will group reliably, point of impact issues can be resolved with sight adjustment or shooting style corrections.
Will shooting ruin your hearing? YES!!! Anyone who tells you different needs a lesson on the effects of extreme sound pressure levels on human auditory physiology (and probably a couple of hearing aids). Even .22 pistols generate sound pressure levels high enough to cause immediate and permanent damage. You may not notice it at first, but it's there, and it will never get any better. For those of you who still argue that shooting is not harmful to your hearing, you have my deepest sympathy on your hearing loss (whether you will admit it or not).
However....
If the situation occurs that you are forced to use your gun defensively, don't waste precious time trying to find your ear plugs! A few db of hearing loss is much more desireable than being dead. Groping around to find hearing protection in a defensive situation is just giving the BG that much more opportunity to KILL YOU. I will repeat that in case you didn't catch on the first time .. don't screw around with incidentals when your life is on the line unless you enjoy being DEAD. Focus on the primary objective - saving your life - and don't worry about ANYTHING else until the threat is no longer present.
There is also the tactical aspect of supressed hearing. If the BG can hear you, but you can't hear the BG, that's most definitely not a good thing.
You want every tactical advantage you can get. Engaging in a behaviour that, from a tactical aspect, has several inherently self-limiting factors is just not a good thing to do when your life is on the line.
Now back to your question - .38 or .357. If you want the absolute smallest, lightest snubby revolver you can get, go with one of the extreme lightweight .38's stoked with some premium self-defense fodder (Cor-Bon, Gold Dot, Golden Sabre, etc). If you are buying a snubby that has a particular model available in both .38 or .357, then the .357 becomes the no-brainer choice. The gun looks, weighs, carries and shoots the same, so why not give yourself the option of being able to use either caliber.
Brad