Number of employees, or business receipts.
The Small Business Act states that a small business concern is "one that is independently owned and operated and which is not dominant in its field of operation." The law also states that in determining what constitutes a small business, the definition will vary from industry to industry to reflect industry differences accurately.
What is classified as small, and what I consider small are not the same thing. For example, any business that makes $25M annually (I guess that is gross) is not, IMHO "small". I'll see if I can dredge up figures on the number of jobs "small" businesses create.
ETA: apparently, the statistics come from the SBA itself, they make a yearly report to the president: http://www.sba.gov/advo/research/sbe.html
for a page to explain, or http://www.sba.gov/advo/research/rs314.pdf
to see 2007's report