Both can be search engine friendly. I think there are a lot of good reasons to use divs and a css layout instead of using tables, but it probably won't make much difference when it comes to search engines. Some people think using a css layout will give some search engine benefit, but I haven't seen any evidence.
Still it's a good idea to use css to layout your site and it is search friendly.
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All <div>/CSS layouts are rendering faster than table layouts... that means a <div>/CSS based website will load faster than a table based layout... though for high bandwidth internet users will be no difference... <div>/CSS layouts are also smaller in file size...
Just remembered I saw in other forum website that <div> layout is worst for SEO then table layout... but all others were saying that it can't be because of the divs... probably other reason...
The best reason to use CSS is that it's easier in the long term to edit and update. Really, if you have access to your header or can link out, it will save you a lot of time and space.
if you are going to use simple tables and do not need nested tables,
then you may use tables or div tags as you wish
i have read that nested tables take long time to load and may cause problems
so in that case preferably you may use css div tags
anyhow our focus should be to reduce code and effort.
i think both have no problem with search engines.
but with browsers nested tables may cause some problems.
(x)html/css is much cleaner code, as said above its smaller file size. Also the CSS way of doing things is coding for the future, validation to web standards and all that.
For search engine, make sure you have keywords in content. Both can be SEO finding..
XHTML is way to go - less codes and clean.
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