Steam.

Pros

1) steam has sales on PC software, not a bargain bin, actual sales on recent releases.

2)Best DRM there is, lets face it, there are always going to be jack ass companies that think disc checks, CDKEYs, and SecuROM is worth putting in their game. I will take steams occasional Internet checks over a root kit being installed on my computer.

Besides you can play most games on steam without being connected to the net, if you can't it isn't steams fault its because the publisher has asked them to enforce it.

Its easier to transfer steam games over to multiple computers

3)No Damn Disk Swapping

4)the Steam interface has achievements, easy friend communication and game management and can use in-game interface to browse the Internet, see which friends are on-line or invite them to a game.

5)Pre-loading new releases so you can play them instantly at 12amon the release date.

6)Go find a physical copy of X-COM that will work on a vista machine right out of the box...

Cons

1)All the downsides of not having a physical copy. Can't loan it to your friend, what happens if steam goes out of business?, what if you don't have Internet for a long time..

To me the benefits outweigh the cons in favor of Steam in this case. Personally I'm a huge fan of not having to swap DVDs out while gaming