Hi Widget
In my opinion, this is one of the hardest decisions we have to make for our kids!! It is definitely not an easy choice.
I feel the same as Niki, re: 1to1 care until age 3, but that only works if you have the perfect nanny. So it is a catch 22 really, because it is probably "safer" to leave your baby at a reputable daycare facility than with a nanny who you most likely wont know much about

For me, the best thing is to find a nanny that has been with a family for MANY years and is only leaving because they no longer need her because the kids have grown up.
I am lucky in that I have my mom to look after Emily (now 2 years old). She will be going to daycare halfday (9-12) from January when she will be 2.5 years old.
I am in the process of assisting my friend find a daycare for her 1 year old as they have had to change nannies 3 times in the last 9 months already!!! They are working through an agency and still cannot find someone reliable
So, for me - IF you can find the perfect nanny, then thats first prize!!! Otherwise, a daycare is probably better.
Good luck with whatever you decide - as I said this is the hardest decision a parent has to make in my opinion.