Sentences have to start with a capital letter, but this isn't a sentence. It's just a phrase without a predicate.

No difference in meaning -- you just use az before a vowel and a before a consonant.

(In this respect, they're similar to "a" and "an" in English -- we say "a horse" and "an elephant" not for any grammatical reason, but just because the choice between the words is governed by sound.)