It all depends on they type of sites your making I think 1 awesome site if it's a constantly updating article like site. Follow webmaster guidelines, don't use Blackhat teks, offer addicting content, challenge the best in the niche your in, and update like crazy. You shouldn't get banned by any search engines if you play by the book. Make 1 site, and focus all your free time to make it better and capitilize on niche marketing. Running 1 large site can be a full time job If your going for the lazy man automated type of sites that depend on user influence, content grabbing, etc than I guess more is fine, but personally I think real value is in the hand crafted sites that offer unique original content on a constant basis. There are exceptions ofcourse (like dig g . com) but I think the numbers will show that original content on constant basis towers over the automated types
One big site is better. It's easier to maintain and being BIG gives you a lot more possibilities to monetize your site.