Well I will try to give my version of facts as far as I know them a well optimized blog from a SEO point of view is of paramount importance because it gives you the possibility to update your site with fresh content with poor effort and a good-looking page. Moreover, everytime you make a post, you can "ping" it to dedicate services such as pingomatic, technorati etc.. whose services would link you back putting attention on your blog. If you are publishing a quality blog then you will get traffic and spontaneous backlinks will flow. Most people in fact could link you through their blogroll (and you would know it with most scripts, ie Wordpress) and you can earn PR easily too. You can use a blog to backup a content site and revive its popularity. Soon I will post a guide on how to make a SEO wise blog using Wordpress and the most popular plugins to use
Nearly each page has it's own title Updated often Every post is "pinged" to the search engines Many pages
one of the keys to good ranking is frequently upgraded content, so as long as you have frequent upgrades then it doesn't matter whether you have blog or site. but all kind of sites might not be possible to upgrade daily so its earier to have a blog.
With blogs, content updates are easy. Also, new and fresh content + frequent updates + Search Engine Friendly CMS.. all work together for blogs. So you can get desirable rankings if you have PR and good content on your blog.
blog->XML-RPC->backlinks-> high Google PR -> higher SERPs -> more organic traffic -> monetization. yawn.