This is a great debate, and one that gets a lot of discussion in webmaster forums like digital point or netbuilders, and most people seem to come down on the side of one or the other. Essentially the debate is between on page SEO vs off page SEO.
A lot of MFA promoters tell you to create a small 3-5 page site, through some articles up on ezinearticles, add your Adsense code and wait, and in the past this system could be considered very successful, actually it might still be effective if you fly under the radar, but the bigger your site becomes, and the more traffic you get, the more you start to compete with established sites that do a lot more for their ranking.
I'm not going to sit on the fence, I'm going to tell you to do both, and I'm going to tell you why. You can do an experiment to prove how well this works if you have three new websites in the same niche and on different host accounts. Start a blog on each one, and give each blog maybe 5 posts of similar length, all targeting the same keywords.
To make the experiment even easier, forget about registering domain names, just grab a free blog from Blogger.com, Wordpress.com, and Blog.com, they all give you a subdomain so each blog would be competing fairly, instead of having a mix of top level domains, subdomains, and subfolders.
Then on one of the blog only interlink between posts using keyword rich anchor text, on the second blog don't interlink between posts instead only write articles for ezinearticles, and on the third blog do both interlinking and ezinearticles. Now ping the major RSS readers for each blog and sit back and watch your stats to see which one gets more traffic.
I'd be willing to bet that 90% of the time the two blogs with the ezinearticles will get traffic faster than the blog with only interlinking, but wait a little longer. Soon you'll see the blog with only interlinking will catch up with the blog that only has ezinearticles backlinks, but the blog with both will stay ahead of both of them and after 3 months will have several times more traffic than the other two.
OK, so that isn't an example, I'm not stupid enough to disclose my test blogs, that would ruin the test and I'd have to start again, but I can tell you that I used the results of this test to promote a client who has a website here in Spain and her little B&B that was previously only on page 4 of Google shot up to the #1 position in 2 months.
I did that by interlinking all of her content pages using her main keywords, plus wrote 3-4 ezinearticles for each page on her site, and then just sat back and watched. Of course real SEO never stops, and I'll need to keep adding backlinks and if she wants to target extra keywords she will need more content, but her reservations have increased, her booking ratio is above 50%, and she's very happy. Try this with your own sites, you'll see it works.



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