The search engines don't care if your site is dynamic or static. What they care about is the content of your pages. Make sure every page has a unique title, description, h1 tag, and content. Then go get links to the pages with variations of your keywords. I have dynamic pages that rank #1 in Google for competitive terms...but it's because people like the content and link to it.
From the SEO standpoint, it would be good to create a good "mod rewrite" scheme. But from a deep indexing standpoint, you will need to create a XML sitemap and submit it via Google's Webmaster Tools. Although you can create this by hand, you should use a crawler based generator that simulates the SE. (gSiteCrawler - free and very good for large sites). But again, if you are setting up a shopping cart where the "categories" and "sub-categories" are your main keyword phrases, then you must have a solid SEO friendly CMS template. Head us: if you change the "mod rewrite" file name, you reset the indexing of the underlying tree. So plan this out very well before you submit the XML site map.
Well but i have a question here when it comes to Dynamic SEO. Suppose we do SEO for a big portal say Auto industry then is it necessary to optimize each meta tags (titles, descriptions) like this site has done autopartswarehouse.com Where on the left site there are lot of Text links in blue which point to separate pages so should we need to optimize each page's meta tags??? How would u plan for optimizing a Dynamic site for PORTAL like Auto industry? How many men is required for optimizing a Auto Portal site like the above site for example?