Here is a pretty good posting on the the pros and cons of using custom Site Definitions in WSS3/MOSS 2007.
I had always thought that Site Definitions were the correct way to deploy site level customizations (as opposed to using Site Templates). I began to question that, however, when I heard (from a Microsoft employee working with SharePoint, no less) that custom Site Definitions were being phased out in the next version (Office 14, or whatever). I have not been able to find any confirmation of this, however.
FredSpace 
I have yet to figure out if there is anything I could do with Site Definitions which I could NOT do purely with Features and Feature Stapling. Nothing I have run into so far.
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Thanks for the link! I believe what the MSFT person might be referring to is the expanded use of the Feature framework and Feature Stapling in O14 as opposed to what we commonly refer to as (legacy) Site Definitions. I would guess that the Site Def architecture will not go away entirely; however, if you follow my advice and stick to bare-bones definitions with all your customizations deployed as Features you should have a relatively painless upgrade experience.
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