I think of it less as an either-or scenario and more like:

- How much time, effort and/or money does it make sense to invest in each?

- What quality and size of prospective new client will each avenue bring?

PPC is going to be more of a fleeting 1-for-1 investment, i.e. its effects won't outlast the money you spend on it. SEO is the opposite -- it could have lasting rewards -- but it could also be fruitless, in that Google can take away your hard-earning ranking with a flick of the wrist. So nothing is for sure in terms of SEO; success isn't guaranteed.

In my experience, neither PPC nor organic search make for excellent lead sources for an online services business as commoditized as web design. You're better off with more guerrilla-marketing-style tactics.