i prefer xhtml/css more than anything else. If i have a site that has under 20 pages and doesnt need dynamic content then i will stick to XHTML/CSS.
IF i need to do a site which has hundreds of pages then i will use XHTML/CSS/PHP/mySQL, and i will also use all of these if my client has little understanding of web design and need a control panel to add content on the fly.
So overall XHTML/CSS by itself u cant go wrong at all, plus you can optimise alot better for
SEO