The numbers vary somewhat depending on the source, but there seems to be general agreement about the order.
Flash Fiction: under 1000 words
Short Story: 1,000-7,500
Novelette: 7,501-17,500
Novella: 17,501-40,000
Novel: 40,000 and up (though a lot of sources say 50,000, just to be safe)
It's probably true that most readers don't really care about the fine lines. They just want to to avoid buying what they think is a novel only to find it's a short story. There actually seems to be more of a problem in nonfiction, where a lot of people don't allude to length in their description (though a customer could look on the product page and see easily enough what it was). For shorter nonfiction, I use a booklet label. When I first started out, I include labels like novelette in the title because I'd seen the practice among trad authors, but I think it's old-fashioned now.