Quick semantic question...
Due to evolution in a macro sense does the word "species" have any real meaning? I was thinking about the recent studies showing that modern humans have Neanderthal DNA but I've always been given the definition of species that two different species are incapable of interbreeding. Or does that mean we are in fact two breeds of the same species?
"Species" is a useful concept, but I wouldn't get too hung up on its objective reality. Evolutionarily, species are lines drawn through continua. Looking for the line when one species became another species is like looking for the line when Latin became French. Reproductive isolation is a good rule of thumb for defining species, but there are others as well. A lot depends on what "work" the researcher wants the species concept to do. Wikipedia actually has a pretty good discussion of different definitions in its entry on species.
Anatomically Modern Humans (AMH) and Neandertals apparently could interbreed, but in other ways they were so behaviourally and physical distinct that I am really not sure it is useful to think of them as the same species. But there have certainly been debates as to whether they are Homo Neandertalensis or Homo Sapiens Neandertalensis.
Reference: Biology, 6th Ed. (Campbell & Reece)
Modes of Speciation:
a) Allopatric speciation: a population forms a new species while geographically isolated from its parent population. Example: A group of trees is separated in time by a river, and speciation occurs due to (perhaps) exogenous environmental factors.
b) Sympatric speciation: a small population becomes a new species without geographic separation from its parent population. Example: A group of trees is left in tact, but speciation occurs due to (perhaps) endogenous and exogenous factors.
Hope this helps with your question.