The only difference between manual and automatic is that in the case of automatic the operating system itself starts the service after boot up, whereas in the case of manual the service is only started when called upon by another service or program.
If you have no need of the service at all, you have to disable it. Telephony seems to be one of those services that always wants to start up even when you seemingly have nothing that uses it, and the system would always complain if you disabled it. They seem to have fixed that problem in Vista, and they may have fixed it XP/SP3.
I see boot and system too in VS2013. – John – 2016-08-22T16:50:30.113
In later versions there is also "Automatic (Delayed)" (added in Vista/2008) and "Trigger Started" (added in 7/2008R2). – Richard – 2011-05-20T06:26:27.850
Related: What does “delayed start” do in startup type for a Windows service?.
– studiohack – 2011-05-20T23:11:01.507