I prefer dmgs myself. I agree with the arguments against packages. Who knows where could be shoving information on your drive? (Although once you run the application, who knows where it's saving config information... but that's a different issue)

Zips really aren't a problem, but the presentation of disk images is nicer. I can see how a mounted disk image that needs to be ejected could confuse people, but it's been pretty common for a while, and hopefully even most casual users would be familiar with it.

To address the problem of people running the app from within the image.. your program could detect it's location and offer to copy itself into the Applications folder. Delicious Library does this, I believe.