I have had recent experience of both systems. When I did a work-related diploma a few years ago via distance learning, I found it was all to easy to complete a module then forget it. I also felt very isolated as I had no contact with my fellow students and my tutors were only contacted by e-mail or phone.

I have since been on other courses which have combined a certain amount of home study with a few days at university which I found much better as I felt i learnt a lot more by being with other students.

Having said all that, I am trying to learn a foreign language purely for my own interest and there are no classes locally so I have had to use distance learning sources which have been fine.

Basically, both systems can work but it depends on what you are trying to learn, what your time scale is and whether you can discipline yourself to study without the support of other students to compare notes.