As BioWare executive produer Casey Hudson explains it to Game Informer, these choices are basically difficulty and auto-fill settings for people who expect different things from the Mass Effect experience.
"You have to make a game with a certain design before you realize that there are different player types," Hudson said. "One of the surprising pieces of feedback was for some players, it's not that they don't like the story. They love story. In fact, the story is so important to them that they feel the story choices are intimidating
The story setting will make it more difficult to die and makes the action scenes easier, so players can mow through enemies, Hudson said. The action mode fills in default dialogue that grants players access to a lot of interesting things, but "it's not canon," Hudson said. "We have a rule in our franchise that there is no canon."
so basically its this Story: Full convo choices, easy combat difficulty Action: auto convo choices, normal combat difficulty Roleplaying: Full convo choices, normal difficulty.