It's really up to you. When I was in school I was in a tiny room and I still managed to have two towers plus a laptop.... all on 24/7 (for Team Anandtech). Now I've graduated and I have a ton more space but I have an SFF.
My opinion:
I like the SFF because it's quieter and because the fact that it sits on my desk means it's a lot easier to use the USB as well as insert any CompactFlash cards. Back in school, I never really had to touch the drives at all and I didn't do much with photography so I didn't care if it was inconvenient to download pics. But since this probably doesn't help you much, I'll try harder....
SFF Pros:
- Looks neat without going too extreme (The "Hey, that's cool" reaction vs. the "Wow, this guy is really carried away with modding his PC)
- Fits easily on a moderately sized desk... You can even stack papers and crap on top of it.
- Easier access to ports.... even the back simply because it's smaller and easier to move around
SFF Cons:
- Expansion is limited
- AGP cards can only be moderate length (if you want exact measurements, let me know...)
- Usually only 1 PCI slot... same length limitation
- Only one 5.25", one 3.25" external, one 3.25" internal. In other words, if you want two HDs or a RAID, look elsewhere
- Limited selection
Tower Pros:
- lots of expansion
- could be quieter (depending on your fans, of course)
Tower Cons:
- big
If you're looking mainly to game, you may want something else if you're planning on getting a huge video card. Might not fit. And if you're looking to spend to save space, another option is a flatscreen. More space saved there than an SFF.