"Imagine a school with children that can read and write, but with teachers who cannot, and you have a metaphor of the Information Age in which we live."
-Peter Cochrane

The admission of ignorance is the essential first step toward knowledge.

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Intelligence - Hacker - Hacking

So, what exactly is a hacker? First, let's define what a hacker is not. A hacker is not a mugger. The people with weird names who are arrested for stealing credit cards or shutting down Yahoo are not hackers. They are criminals. Other people with uncanny names, who advise the president of the United States, NASA, and various three-letter agencies, are hackers. They are computer security professionals.

A hacker is one of the most feared types of persons on the Internet. Hackers have been called both techno-revolutionaries and heroes of the computer revolution. Hacking has become a cultural icon about decentralized power. But for all that, hackers are reluctant rebels. They prefer to fight with code than with words. And they would rather appear on the net than at a news conference. As a result of this tabloid mentality, the hacker attempts to fade into the digital world, where he and it is almost always he who has a place if not a home. The aurora of a hacker is a mystical one that has eluded many of their victims. To say that they are rude and arrogant would be far from the truth.
A Hacker is a "person who enjoys exploring the details of programmable systems and how to stretch their capabilities." This means that he is not necessarily a computer geek or a nerd. The hacker defines himself in terms that extend beyond the computer, as an "expert or enthusiast of any kind. So in the broadest sense, the hacker hacks knowledge, he wants to know how things work, and the computer, the prototypical programmable system simply offers more complexity and possibility, and thus more fascination, than most other things. From this perspective, hacking appears to be a harmless if nerdish enthusiasm. But at the same time, this seemingly innocent enthusiasm is animated by an ideology that leads to a conflict with civil authority. The hacker is motivated by the belief that the search for knowledge is an ending venture and should be unrestricted.
But invariably, when a hacker explores programmable systems, he encounters barriers that bureaucracies impose in the name of security. For the hacker, these security measures become arbitrary limits placed on his exploration, or in cases that often lead to confrontation, they become the focus of further explorations: for the hacker, security measures simply represent a more challenging programmable system. As a result, when a hacker explores such systems, he hacks knowledge, but ideologically he hacks the freedom to access knowledge. They have deep and intimate lust to search around inside of a place they've never been, to explore all the little nooks and crannies of a world so unlike the boring cesspool we live in. So why would he destroy something and take away the pleasure from someone else?

A true hacker seeks to expand his own knowledge and free it for everyone. In the field of computer security, exposing the flaws in programs and operating systems, used by most people, to heighten security awareness, etc, does this. It's a learning experience. When an exploit is released, it's not to cause trouble; it's to make administrators and users aware of potentially serious problems so they can fix them. At the same time, it keeps software developers on their toes, making sure that they don't make shoddy, hole-ridden software.
But there is a disturbing growth in what the hacking scene refers to as “Script kiddies”, People, usually nosy teens, who use code written by a hacker to break into systems in order to get the information they want without any regard or regret for how they do it. Why should they bring down the whole world on the few true hackers who aren't cruising the phone lines with malicious intent?

To quote from one of the reference’s I got hands on, which says the same point.

..."These kids don't really have any skills," says Deth Veggie of cDc, one of the oldest hacker crews around. "Since they didn't learn it for themselves they don't respect the system they're infiltrating. And so they steal things and download files, which a real hacker would never do."...

Incidents like that end up giving true hackers a bad reputation, and they end up looking like pranksters. Although the account is from the perspective from a hacker, it shows that there is a certain degree of division of the term hacker, as well.
But I won’t label the latter as ‘Crackers’, which is an inappropriate but the most often word used while referring to nefarious hackers. ‘Crackers are usually programmers or code-breakers who crack software, create and spread viruses and do other such wicked jobs but they rarely ever break into a system. Those who do so are usually a novice in this jungle and are very much illumined by the power of code, but in any case they are the one who are loathed the most by the real hackers. Hackers have a sort of honour among thieves. There are hacker’s ethics, and these chaps scorn upon their reputation. Hacker is somewhat of a very honourable title, and they don’t like anyone giving them a bad name.

But in this creepy world of ours where computer literacy is still much beyond the priorities of a major population, a general opinion about a Hacker is out of the question. But still among the persons who claim to be familiar with the term, this man is nothing more than someone with an extraordinary intellect and indulged in the greyish sort of jobs. Still he has got no less magnitude than a celebrity for he is certainly a face out of the crowd. But he may never have the honour he is worthy of and would always be treated as a mere crook or a criminal. And that’s too, for something that is not a wrong at all… for something that he just can’t spare with and that is his curiosity and his nature to explore the depths of technology to feed his grey cells.

At last I’d like to end with an excerpt from a manifesto of a true hacker, known as ‘Mentor’: -

“This is our world now... the world of the electron and the switch, the beauty of the baud. We make use of a service already existing without paying for what could be dirt-cheap if profiteering gluttons didn’t run it and you call us criminals. We explore... and you call us criminals. We seek after knowledge... and you call us criminals. We exist without skin colour, without nationality, without religious bias... and you call us criminals. You build atomic bombs, you wage wars, murder, cheat, and lie to us and try to make us believe it's for our own good, yet we're the criminals. Yes, I am a criminal. My crime is that of curiosity. My crime is that of judging people by what they say and think, not what they look like. My crime is that of outsmarting you, something that you may never forgive me for.”