Well, the problem with multi tracking is that you can kill the liveliness of a band just playing together. There's a vibe between musicians actually playing together that's really impossible to record as multiple tracks. If you're recording really sanitized, bubblegum pop or by the numbers rock, overdubbing, while "safer", can make playing sound kind of lifeless and dead.
I guess the main thing is if the musicians are talented enough to play along with a recording and not get thrown off by it, just do it by musical discipline rather than vibe and feeling.
I haven't been recording my band for very long, especially considering how short a time we've been playing together, but it's definitely harder to edit something if it's all in one track.
Go with what sounds right.