Is one better than the other? Hard to say. Sometimes the difference between the two isn't that great, only a matter of a few scenes that were cut for time reasons or something similar. Sometimes it's a completely different movie after the extra footage is inserted.
I know that Robin Hood: Prince of Thieves isn't a particularly good movie but I've always enjoyed it (even with Kevin Costner's amazing disappearing, reappearing accent), mostly because of Alan Rickman's awesome turn as the Sheriff of Nottingham. After watching the "director's cut" version of that film, it has been ruined for me. I know, I know, there was always the witch and her spells, but the new version went even further down that path, to the point where it made me uncomfortable to watch.
Earlier, I blogged about Kingdom of Heaven and how it made me consider what it means to be a person of faith versus a person of religion. Either version of this movie is fine to watch but the director's cut is about 45 minutes longer and adds a whole (and rather major) plot line. Is it necessary? No. Does it improve the movie? Debatable. Does it help tie up a few puzzling bits in the original. Yes, it does. Would I recommend one over the other? Depends on whom I was recommending to.
And Blade Runner. Good grief! There are so many versions of this movie out there that I'm not sure which one I should watch.
What's your take? Are director's cuts and/or extended versions of movies better than the theatrical release? Or is it a conspiracy by the studios to try and make more money?