Mobile Dilemma: Build an Application or a Mobile Website?
Usability is the largest issue for mobile users. The effort it takes to open a new application, type in a search query, or answer an email on a mobile device--versus performing the same actions on a desktop PC--is why mobile users have a limited attention span. Mobile websites have to be created with that premise in mind if they are to succeed.
SEO rankings for mobile websites are hard to quantify...when a person searches the web using Google, they are getting the results from the same database of websites that non-mobile users are searching. Having a mobile-optimized website certainly won't hurt your search rankings, but the real benefit (versus mobile applications) is that mobile websites don't require any downloads, payment or approval. Users can visit a mobile-optimized website from any device, whether it's an iPhone, cell phone or PC. For the mobile user, it's a transparent, instantaneous experience--either they can view (and use) the site via their device, or they'll go somewhere else where they can do so without having to scroll left, enlarge, scroll down, and otherwise manipulate their device just to read a web page.
Another reason to opt for the mobile website over the app is that once online, your website is available to anyone. An application for the Pre, iPhone or Android market has to go through the store's approval process, which can take anywhere from 2 days to 2 weeks, if it is approved at all.