The term "Settlement" is usually preferred over "Colony" to avoid association with the excesses of the colonial period on Earth.
The technical argument is that there are currently no inhabitants of the Moon so it does not meet the historical description of a colony.
Another distinction is that Colony refers to "people who settle in a distant land but remain under the political jurisdiction of their native land." I do not think a tie back to a nation state on Earth will be the defining element of a lunar settlement.
I could be wrong on this. If the US and China get into another Moon race, we could see two colonies (not settlements) on the Moon with strong ties back to Earth. Recently NASA has placed technical information about the Saturn V under ITAR making it illegal to export this 1966 technology. I guess they do not want to give China any help in the design of the Long March 6.
I support the sole use of "settlement" and feel we need to standardize on it. Having two phrases can split up inquires unnecessarily and make information had to find.
--Jriley 12:12, 31 July 2007 (UTC)