From an interview in the December 2010 Progressive.
Q: You call your work not science fiction, but speculative fiction. What's the distinction you're drawing?
Margaret Atwood: The distinction has to do with lineages. It has to do with ancestries, and what family books belong to because books do belong in families. The ancestor of science fiction is H. G. Wells with books like The Time Machine and The War of the Worlds. Those books involved things that are very unlikely to happen or are actually impossible, but they are ways of exploring possibilities and human nature and the way people react to certain things. And if you go to another planet, you get to build the whole society and you can draw blueprints and have fun with talking vegetation and other such things.
The lineage of speculative fiction traces back to Jules Verne, who wrote about things that he could see coming to pass that were possible on the Earth--this wasn't about outer space or space invasions--but things that we could actually do.
There were a lot of utopias in the nineteenth century, wonderful societies that we might possibly construct. Those went pretty much out of fashion after World War I. And almost immediately one of the utopias that people were trying to construct, namely the Soviet Union, threw out a writer called Zamyatin who wrote a seminal book called We, which contains the seeds of Orwell and Huxley. Writers started doing dystopias after we saw the effects of trying to build utopias that required, unfortunately, the elimination of a lot of people before you could get to the perfect point, which never arrived.