Id like to throw my little hat (french beret or fedora...havent decided which yet) into the ring here.
Some nice arguments for both sides. I agree that both puppet effects and cgi have their merits.
I think the problem with cgi in movies these days isnt that its not better or worse than puppets and clever camera work..i think the actual problem is hollywood relying too heavily on effects and forgetting basic things like story, acting, direction etc. The best cgi in the world can fall flat if the story is bad.
And now my little soap box rant which also illustrates my point.
Im a massive superman fan...the orginal 1978 film is the best imo (now ask me how many directors cut/bluray/extended variations I have hehe).
Now to me, here is a great movie. The script was good, the actors were good (they cast for Clark Kent not superman...which in my theory makes for a good superman film because typically we see more of clark kent than superman so if the actor isnt that good at clark...forget a believable superman...BUT i digress sorry!) , the music was good and the effects were good. They didnt use cgi, they used plain old fashioned camera angles and clever wires to get the results. Old school cgi you might say.
Now compare this film to the Brandon Routh acted epic, Superman returns. What went wrong here? Bad acting, bad story, bad plot...mmm maybe. Was it the cgi? maybe that too...anyone else think that Superman looks like one of the movie-tie-in dolls when he flies into the sun at the end and we see his face in the light? but hey that aeroplane scene wasnt so bad was it? (anyone else cheer at the cinema when they saw supes in the doorway of the plane? i know my cinema did
)
I dont think the cgi was the defining factor in the failure of superman returns but it was a part of it...I think the main failure is simple and what Ive already suggested at above.
Watch the original 1978 superman on bluray in a super hd back lit led tv. Now do the same thing with superman returns.
Supes returns falls flat by comparison and I think this is due to the fact that the original superman film is timeless. It was original (yes its based off a comic) but the film itself is held as a template for how to make a super hero movie. I can watch this movie over and over..but my Supes returns dvd sits in the corner and sucks its thumb in despair wondering why the writers didnt give it better plots, why the actors didn't understand what classic characters they were portraying, and why...oh why....in some scenes...supes looks like a plastic doll.
Anyway, im taking my hat back out of the ring and Im off to watch Labyrinth....probably followed by Avatar 
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