It depends on the mood, the place, and the people and I gues always some people will be looking for a smooth seamless set, so for mashing it up.

As I don't DJ I cant'd really say from that pint of view, but from playing live, I've had both work - where I've taken my full rig out and have a planned set thats' a lot more smooth I think you get people more tranced out and into the whole set - where I've taken minimla kit out and just pissed about with loops on the fly you do sometimes lose people a bit when you mash up and it doesn't quite work, but then there is more energy overall and to play it it's more fun...