Of course static sites.. it is more SEO friendly but there are other factors are also important. as static sites will take less time to load no query string will be there and many more..
It also depends on how the site is generated. With PHP you can generate static content from a dynamic source so this will be fine for SEO. As jg_abad said though you should aviod urls with too many parameters as it will just mess with the SE ability to index.
for my rather large site I have both static and dynamic pages - all important stuff strictly on static pages with a CORRECT frameset usage - blog and photo gallery on dynamic pages 10+ yrs success that way ( succes by means of increasing traffic and adsense $ ) I started many yrs strictly static for all main content and added dynamic content later after the most important stuff was online already
Static is better for SEO as you can change every onpage parameter. However, if you want to build a large site, it's better to go with dynamic and try to implement many customization options (like for instance to have the possibility to assign each page a different title tag). Also, make your links look static by .htaccess configuration. Like for instance, instead of having a link look like this: www.xyz.com/phpscript.php?var=smth, make it like this: www.xyz.com/phpscript/smth I hope that you understand what I'm saying. good luck.
I have a site with thousands of handcrafted static pages consisting of ten thousands of files ... ( out of the 24808 Total URLs my access_log stats show, only a smallest fraction is dynamically created ) hence the size of a static site is in no way limited for pure quality reason I prefer static
I prefer dynamic that appear as static with Apache Mod Rewrite. You can crank out alot of well seo'ed pages this way.
content of lasting value needs no change. the content is written with that in mind - hence the content is written in flat files to last as a heritage to mankind! for small areas within the page such as adsense or footers - I use SSI
Basically in SEO Static pages is more preferably that Dynamic pages. But enhancing of mod rewrite you can do dynamic pages to static pages.